SBP Announces New Housing Finance Rules, Extends Loan Term to 30 Years

ISLAMABAD: The State Bank of Pakistan (SBP) has introduced important amendments to housing finance regulations, increasing the maximum loan repayment period to 30 years for purchasing a house, flat, or plot, as well as for constructing a home. The new rules have come into effect immediately, giving people who want to buy or build a home over a longer period more time to repay their loans.

According to the State Bank, under the new housing finance framework, banks and Development Finance Institutions (DFIs) will be required to comply with the updated instructions. These rules will replace several previous instructions issued regarding housing finance between 2019 and 2021.

Under the new regulations, housing finance can be obtained for various purposes, including purchasing a house or flat, buying a plot, constructing a house on an already-owned personal plot, and renovating or expanding an existing house.

Housing finance can also be used to install renewable energy systems, including solar systems. However, the maximum financing period for renewable energy projects has been set at 10 years.

Under Regulation HF-2 of the State Bank of Pakistan’s revised housing finance rules, banks and DFIs must adopt standardised, simplified loan-application forms and explicitly list all required processing documents in both physical and digital formats in Urdu and English.