Issue: September/November 2008
First National Bank

Housing solutions from FNB

With unpredictable interest rate hikes, many people are skeptical of investing in property with the uncertainty of knowing whether they will afford their bonds or not. First National Bank (FNB) offers unique housing finance products that can make the dream of owning a home a reality without blowing one’s budget.

FNB Smart Housing Plan is a unique product that allows any permanently employed individual that has either a pension or a provident fund to secure housing finance. If provisions have been made by the pension or provident fund rules, members of the fund can use their saving reserves as security against a home loan.

This means that FNB enters into a legal agreement with the respective fund, where required with the employer of the potential home owner, which serves as a link between the bank and the borrower. This product allows for prospective home owners to automatically qualify for a discount on the interest rate that the fund has negotiated on behalf of its members.

Monthly repayments are then made via payroll deductions or a debit against the member’s bank account. Rates are closely linked to the prime lending rate, as the loan is secured by the pension or provident fund, allowing the bank to charge lower rates. The loan is limited to an amount not exceeding 80 % of the member’s withdrawal benefit in the fund, with affordable repayments.

This means that a pension fund will allow members to withdraw a pre-determined percentage for housing. However, this will differ in terms of the particular fund’s rules. These limits have been put in place to protect people and ensure that there will always be some balance remaining in the event a borrower defaults.

To qualify for the loan, an individual must have a minimum take-home pay of R500 per month after all expenses (including proposed loan repayments) have been deducted. The loan is not limited to buying a house and can be used for home improvements, home alterations or extensions, or even the building of informal housing.

FNB Housing Finance is a business unit in the retail bank focusing on the affordable housing market in SA. The unit was specifically set up to provide access to housing finance solutions for those in dire need of affordable housing. The unit makes use of two products (Smart Bond and Smart Bond Step-Up Facility) that make it possible to bolster on a daily basis the 2004 Financial Sector Charter commitment by the banking industry to provide home loans to low-income earners and at the same time tackle the SA housing backlog.

The product that makes it possible for people to get access to housing is Smart Bond. A prospective home owner with a good credit record and a regular monthly income can choose to get their home financed using this product. Smart Bond grants potential home owners a full loan amount and bond costs, making the process of buying a house hassle free.

The competitive product allows prospective home owners to qualify for any home loan amount based on the maximum monthly repayment that they can afford. Qualification is strictly based on affordability i.e. a comprehensive income and expenditure analysis is conducted with every applicant.

What makes the product even more appealing is that it offers an option of a 5-year fixed interest rate for five years, which will assist in budgeting especially in times of interest rate hikes. Should a home owner wish to have a variable interest rate, this option is also available.

With Smart Bond there is also an option to consider our affordable life insurance that requires no medical checks in order to qualify. Approved home buyers also go through a comprehensive home-ownership programme that helps them learn more about home ownership, making the experience of investing in a home truly rewarding.

Smart Bond Step-Up Facility:

This facility allows customers to qualify for a bigger home loan (about 15% More) or (Pay about 15% less on their bond instalments). This product option automatically comes with a 5-year fixed interest rate & monthly instalments are adjusted by about 3% annually to ensure that the bond is still paid off within the 20-year term.

If you would like to apply for a Smart Bond:

  • Call us on 0860 644 644 or
  • Visit your nearest FNB branch

To qualify for a Smart Bond you need the following:

  • A valid ID document (you and your spouse, if applicable)
  • Complete application form
  • A recent salary advice/pay slip (you and your spouse, if applicable