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What is Pension supported Housing Loans?
A Pension-supported Housing Loan is an alternative way to fund any aspect of one’s home. It is so named because the pension or provident fund benefit due to an employee can be used as security against the loan without eroding the retirement benefit. The amount borrowed is guaranteed against the fund – it doesn’t come out of it. This means that the employee’s pension or provident fund value is only affected in exceptional circumstances.
How do Pension-Supported housing loans work?
• Section 19(5) (a) of the Pension Funds Act empowers pension funds to furnish guarantees to secure housing loans granted to members by third parties such as Absa.
• Every month employees contribute to the fund for their retirement.
• The fund uses their savings to provide a loan guarantee to Absa.
• Money is deducted from their wages/salary every month to repay their
Pension-supported Housing Loan.
• The loan has to be repaid in full before normal retirement age or if your employee leaves the fund, thus with no negative effect on your retirement savings.
• The process starts with a Pension-supported Housing Loan Surety ship
Agreement between Absa and a registered retirement fund followed by the participating employer(s) agreeing to make payroll deductions.
Absa offers an advanced, tailor-made, dedicated scheme administration system with competitive interest rates and high value-added benefits for all your employees. This system ensures less impact on employer resources.
You’ll also get:
• A genuine home finance service for retirement fund members
• An optional credit life insurance policy to protect members’ fund benefits
• Professional assistance for members when they apply for loans
• Online application forms, making it easier to apply
• An optional protection against any form of fraudulent activities with verification mechanisms to ensure that all loans are used for housing purposes only.
Who needs pension supported loans?
Many people have difficulty obtaining a home loan involving a bond whilst other types of loans are usually too expensive or too small to use for housing purposes.
With a Pension-supported Housing Loan from Absa, your employees or members have another type of loan for housing purposes that is affordable, convenient and does not involve the time and costs of registering a bond.
The Pension Funds Act permits funds to furnish guarantees only as security for loans granted to members for housing purposes.
The following fall within the definition of housing purposes:
• Buying an existing home
• Redeeming an existing loan for housing purposes (i.e. settling your home loan or part thereof)
• Building a new home
• Improving an existing home
The property must be owned by the employee and must be used as the normal residence of the employee and/or his/her dependants.
ABSA Pension Supported Housing Loan (PSHL) Focus on 3 Core Elements:
The fund (involving managers, administrators, principal officers and trustees), employers (both in the private & public sector and unions) and the employees (all the fund members).
Absa PSHL develops trust and security between themselves and the fun administrators through solid, responsible lending and due diligence of the Absa systems set in place.
It also gives employers peace of mind by supplying a product that is convenient and trustworthy.
PSHL is hassle-free and has limited impact on company resources since the entire process from applications to approvals or declines, to payouts is all managed by Absa.
And finally, employees benefit the most. Not only do they get the chance to own a dream house, they also have financial security, controlled monthly payments, highly competitive interest rates and the backing of a major bank.
How can we make it easier?
Our structures are in place to make everything easier. From online applications to committed and reliable employees, we take the administration hassles out by offering employees affordable and realistic housing loans.
How Do You Keep Control
Fund managers, trustees and employers determine the maximum amount that can be borrowed as well as the percentage and payback terms, meaning you know exactly what to offer the employees in your company. We give you all the resources to do it your way.
For example, if an employee has a withdrawal benefit in the fund of R50 000 (net of income tax and other statutory deductions) and the fund has set a rule that the maximum any member can borrow is the equivalent of 70% of their withdrawal benefit, then the maximum the employee can borrow is R35 000. Absa will manage this on behalf of the fund.
The amount an employee will be able to borrow depends on how much savings they have available in the fund (their withdrawal benefit) as well as how much they can afford to repay every month and for how long.
Mortgage Plus will find the right deal for you. Guaranteed!
CONTACT US
Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.
Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za
www.mortgagepluscc.co.za
Absa Affordable Housing
Absa Affordable Housing EnhancementsIn light of changing market conditions, particularly at the lower end of the housing
Market, Absa Home Loans have taken a strategic decision to increase the income levels
Of the MyHome product and Affordable Housing segment.The product offered within this segment
-Income less than and equal to R11000 (Gross Joint Household Monthly
Income): Absa MyHome product
- Loans up to 110% Loan To Value LTV and Maximum 80% Risk to Value (RTV)
- Borrower Education for all customers with loans in excess of 80% of the purchase price.
- Repayment term up to 30 years (default if not specified; i.e. 20 years)
- Credit Life Policy – Home Loans Protector Plan
- 30% Collateral Replacement Indemnity Scheme (CRIS) Absa Affordable Housing -Income between R11 000 and R15 000 (Gross Joint Household Monthly Income):
- The business as usual home loan rules will applyThe Collateral Replacement Indemnity Scheme (CRIS)
In order to mitigate the risk between 80% to 110% customers must either provide a cash deposit, Employer guarantee, government guarantee, Pension Supported Home Loan or other acceptable Guarantees.
If the customers cannot provide collateral, Absa will provide a CRIS ( Collateral Replacement Indemnity Scheme) guarantee from the Home Loan Guarantee Company (HLGC). CRIS is effectively a bad debt insurance product. HLGC will cover the guarantee amount Agreed upon, to reduce the potential shortfall amount recovered after sale in execution of The property.
CRIS Rules and Requirements:
- The insurance cover period is 5 years from the date of registration and this may be renewed.- All customers with CRIS must attend Borrower Education
- HLGC will provide a CRIS guarantee of up to 30% (80% RTV to 110% LTV)
- New CRIS loan will be administered by the Home Loan Administration Centre (HLAC)
- Any accounts in arrears will be administered by Secured Collections.Please Note: Absa home loans systems will allow a maximum of 110% to Purchase Price and Loan to Valuation without you having to capture an employer or personal guarantee for all
Applications where the Total Household Gross Monthly income is between R1500 and R11 000
And the customer does not have a deposit or other types of collateral security.
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