Civil Servants to Get GIPF Housing Loans

CIVIL servants will finally get affordable housing loans, that will be guaranteed by their pensions with the Government Institutions Pension Fund (GIPF).

Information released at the end of last week, when the scheme was launched in Windhoek, revealed that the GIPF Housing Loan Scheme will enable a member to obtain a home loan, using the funded property to guarantee the loan.

According to the GIPF, the member’s pension credit balance remain untouched and the loan must be utilised for housing purposes only.

The scheme will be administered by the private firm, First Capital, through its First Capital Housing Fund which was established in 2011 with an initial investment from the Government Institutions Pension Fund (GIPF) to pioneer a new way of providing home loans to GIPF members to enable them to acquire and develop affordable housing.

GIPF members with a salary of N$5 000 will qualify for a loan worth N$430 618 while if they were to get a loan with the same salary at FNB Namibia, the qualifying amount is N$230 081. The minimum loan size is N$200 000 at FNB and N$100 000 for Standard Bank for GIPF members.

The conditions through the GIPF scheme include affordable interest rates, a three-month grace period, a flexible loan term from one year to 30 years and zero deposit options, the GIPF said.

Chairperson of the GIPF Board of Trustees, Ellaine Samson said the pension-backed housing loans will start after the amendment to the Pension Funds Act and Rules, expected to happen this year. The Fund’s market value as at 31 March 2014 stood at N$75 billion, Samson said.

GIPF CEO, David Nuyoma said the scheme ‘has been coined against the backdrop of the following realities.’

“The Pension Funds Act in its current form only makes provision for home loans in respect of houses situated in urban areas. However, it does not cover houses situated in rural or unproclaimed areas. In light of this limitation we shall only concentrate on proclaimed areas for now,” he said.

Nuyoma said in terms of the newly amended Regulation 27 effective from January this year, the interest rate on housing loans has been reviewed and now stands at Repo Rate plus four percentage points. He said this review translates into affordable rates and added that GIPF members can now easily participate unlike in the past when the interest rate was fixed at 16%.

He said with this in mind, the GIPF decided to split the idea of housing assistance into two categories. The first category launched last week, is a mortgage-backed scheme, operating on a revolving fund basis and falls under property investments in terms of the amended Regulation 28 of the Pension Funds Act.

The second category is referred to as pension-backed home loans for which pension is ceded as guarantee. This category will be introduced when amendments to the Pension Funds Act and the rules are finalised.

“If these amendments are ratified, members residing in unproclaimed areas will be able to participate and the fund will be duly authorised to enter this line of activity respectively.

Given these new developments in the regulatory environment we took a principled decision to commence with what is feasible under the current circumstances,” said Nuyoma.

He said since First Capital Real Estate Finance Fund already had a mandate with dual focus areas including local authority infrastructure and housing finance, it was logical to activate them in this respect.

First Capital Housing Fund will be responsible for receiving and assessing members’ applications for housing finance, effecting payments as well as collecting repayments on a monthly basis among other things. First Capital has invested in the necessary infrastructure to implement the programme, said Nuyoma.

Source : The Namibian