Traditionally Tanzanians have a culture of saving and building homes over the course of many years, opting to rent in the meantime. Home loans have become an increasingly accessible avenue into home ownership.
According to a 2017 Finscope report, an estimated 6 percent of the land in Tanzania is jointly owned. The discussion of land and home ownership is not typically done by couples until children come into the picture.
This was the case for Susan and her husband Jonah, tired of renting yet unable to commit to the expenses of buying a home, explored the option of home loans through their bank, Stanbic. Admittedly they were initially both skeptical but consultations with their bank manager fast-tracked their dreams of buying a home for their young and growing family.
Whereas the baby boomer generation owned land and had to spread their home building expenses over the course of a number of years, Susan and Jonah were only required to have an equity payment of 20 percent.
Once the couple had managed to save for the equity payment their bank financed 80 percent of the value of the property. Securing the finances for a home was the first step, next were the monthly payments, which could not exceed 40 percent of their monthly income. It is advisable to exercise caution and avoid loans that will make it difficult to meet the obligations of monthly payments.
Additionally, in order to secure a home loan, a title deed will be required. It is an important document that legitimizes land ownership and gives the bank assurance of assets. According to Finscope, land ownership currently stands at 37 percent and only 3 percent claim to have a title deed.
The process of obtaining a title deed begins at Ministry of Lands, Housing and Human Settlements Development which can also provide copies of title deeds if necessary. Other documents to support the application process include identification, proof of source of income and existing loan history.
Home loans are not restricted to outright purchases but also apply to building and house renovations, giving landowners the ability to utilize the land resources in their possession. Recent reports highlight that the mortgage market in Tanzania is underdeveloped with a low uptake because of lack awareness.
Like Susan and Jonah many Tanzanians are wary of home loans because the logistics seem long, daunting and difficult. These apprehensions are warranted, without the right advice and information in place many hopeful homeowners will wander and waste their time and resources.
Home loan applications should be discussed with a bank representative. As it is a personal loan, it is beneficial to be knowledgeable about the ins and outs of the contractual agreement and what it will mean for the future of your finances.
Owning a home is a dream that can be made a reality with a small amount of planning and discipline. With the right bank financing, home loans empower individuals to take a step forward and towards making their life more secure and comfortable.