<h5 dir="ltr">Most people find that their journey towards homeownership is often overwhelming and stressful. It’s the biggest financial decision they will ever make, as first home buyers. </h5>
<h5 dir="ltr">With more and more homes costing hundreds of thousands of kina, most of these first home buyers experience a lapse in their ability to pay cash upfront - for the entire property. As a result, they turn to banks for loans.</h5>
<p> </p>
<h5 dir="ltr">BSP First Home Ownership Scheme</h5>
<p dir="ltr"><a href="https://www.hausples.com.pg/banks-finance/">BSP’s First Home Ownership Scheme</a> is not an ordinary loan. It’s a specialized loan facility designed to suit borrowers who have the outright potential to repay the loan. And like any other loan, FHOS is a convenient contract between BSP and a first home buyer, when it comes to buying a home.</p>
<p dir="ltr">With a strong tailwind, the FHOS significantly applies to newly built homes, or brand new homes soon to be completed. These properties must prove to be on a state leased land with a genuine title. </p>
<p dir="ltr">The home buying experience can be intimidating in a way, but with a teaspoon full of motivation, you can calm your nerves to put that journey into perspective, with BSP’s First Home Ownership Scheme.</p>
<p> </p>
<h5 dir="ltr">There are three types of loans currently available at BSP:</h5>
<ol>
<li dir="ltr">
<p dir="ltr">BSP Standard Home Loan</p>
</li>
<li dir="ltr">
<p dir="ltr">BSP Personal Property Investment Loan</p>
</li>
<li dir="ltr">
<p dir="ltr">BSP First Home Ownership Scheme</p>
</li>
</ol>
<p> </p>
<p dir="ltr">And each loan is typically influenced by four main characteristics:</p>
<ol>
<li dir="ltr">
<p dir="ltr">Principal</p>
</li>
</ol>
<p dir="ltr">The principal describes the original amount being borrowed. It is the amount a borrower gets from a lender upon application, excluding closing costs and other related fees.</p>
<ol start="2">
<li dir="ltr">
<p dir="ltr">The Term</p>
</li>
</ol>
<p dir="ltr">The term of a loan explains how long it will take for it to be paid off. For instance, FHOS can take up to 40 years to complete.</p>
<ol start="3">
<li dir="ltr">
<p dir="ltr">Interest Rate</p>
</li>
</ol>
<p dir="ltr">Refers to a portion of a loan typically expressed as an annual percentage of the loan outstanding.</p>
<ol start="4">
<li dir="ltr">
<p dir="ltr">Repayment Frequency</p>
</li>
</ol>
<p dir="ltr">Refers to how often you should make your payments until the loan is paid off.</p>
<p dir="ltr"> </p>
<h5 dir="ltr">Let’s consider an example that illustrates the four main factors in perspective:</h5>
<p dir="ltr">Picture this, you decide to buy a house so you begin your search and you came across one that matches your definition of the ideal house. It’s worth K400,000.</p>
<p dir="ltr">According to your financial situation, you will need a loan to help secure the house, so you turn to BSP. But in order to get that loan, BSP requires that you purchase 10% of the house, to begin with, as a down payment. So, you chip in K40,000 (10% of K400,000), and BSP covered the remaining amount of K360,000 (the principal) with a fixed term of 40 years (the term) at a rate of 4% (the interest rate), which is to be repaid in monthly installments (the repayment frequency).</p>
<p> </p>
<p dir="ltr">By putting these numbers into BSP’s <a href="http://www.bsp.com.pg/Personal/Retail-Banking/Loans/Personal-Loans/Loan-Repayment-Calculator/Loan-Repayment-Calculator.aspx">Loan Repayment Calculator</a>, your monthly repayment would be K1, 688.</p>
<p dir="ltr">(Note: Your monthly repayment amount does not include property taxes, personal insurance or other additional fees)</p>
<p> </p>
<p dir="ltr">Components Of The First Home Ownership Scheme (FHOS)</p>
<p> </p>
<h5 dir="ltr">BSP’s First Home Ownership Scheme is characterized by:</h5>
<ul>
<li dir="ltr">
<p dir="ltr">A minimum loan of K200,000 and a maximum of K400,000</p>
</li>
<li dir="ltr">
<p dir="ltr">40 years maximum repayment term</p>
</li>
<li dir="ltr">
<p dir="ltr">4% fixed-interest rate annually</p>
</li>
<li dir="ltr">
<p dir="ltr">1% additional bank fee</p>
</li>
<li dir="ltr">
<p dir="ltr">Loan amount exceeding K400,000 will be assessed under BSP Standard Home Loan</p>
</li>
</ul>
<p> </p>
<h5 dir="ltr">Fixed-Rate Loan</h5>
<p dir="ltr">BSP’s First Home Ownership Scheme is a fixed-rate loan. Meaning, the interest rate on this type of loan remains consistent throughout the term; it doesn’t go up, it doesn’t go down and it doesn’t go sideways (pun intended). </p>
<p dir="ltr">Case in point, in the previous example, say your annual loan repayment amount is K20, 256 (K1,688 x 12 months), and comprises the 4% interest rate on the principal. This 4% will not change throughout the term of the loan - it is unchangeable, and that is what is meant by a ‘<a href="https://en.wikipedia.org/wiki/Fixed-rate_mortgage">fixed-rate loan</a>’. </p>
<p dir="ltr">As one of the most common types of home loans, a fixed-rate loan such as FHOS requires a borrower to repay the principal over a ‘fixed term’ (an unchanging length of time) with a ‘fixed rate’ (an interest rate that never fluctuates over that length of time).</p>
<p dir="ltr">This type of loan is ideal for borrowers strongly interested in a steady and predictable loan repayment term. Borrowers are usually allowed 30, 15, or 10 year fixed-rate loans. Traditionally, the shorter the term of the fixed-rate loan, the lower the interest rate.</p>
<p dir="ltr">The magic of home loans is that they make home ownership a truth for everyone. But not without a substantial investment (closing costs, down payment, time to apply, etc.).</p>
<p> </p>
<h5 dir="ltr">How to qualify</h5>
<p dir="ltr">In order to qualify for a loan, a borrower typically needs to submit some forms of identification and basic personal financial information, such as employment history, projected down payment amount, authorization to pull credit rating and so forth.</p>
<p> </p>
<h5 dir="ltr">For <a href="http://www.bsp.com.pg/Personal/Retail-Banking/Loans/Home-Loans/First-Home-Ownership-Scheme-Loan.aspx">BSP’s First Home Ownership Scheme</a>, a borrower is required to provide the following proof:</h5>
<ul>
<li dir="ltr">
<p dir="ltr">Be a PNG Citizen and a first home buyer</p>
</li>
<li dir="ltr">
<p dir="ltr">Provide proof &amp; evidence of 10% equity</p>
</li>
<li dir="ltr">
<p dir="ltr">Be an employee of either public service or the private sector and earning a regular income</p>
</li>
<li dir="ltr">
<p dir="ltr">Provide Bank Statement</p>
</li>
<li dir="ltr">
<p dir="ltr">Statement of outstanding debts with other banks or financial institutions for the last three months if any.</p>
</li>
<li dir="ltr">
<p dir="ltr">Provide three (3) months statement if account is held with another bank</p>
</li>
<li dir="ltr">
<p dir="ltr">Provide three (3) latest payslips</p>
</li>
<li dir="ltr">
<p dir="ltr">Confirmation of employment or copy of contract of employment</p>
</li>
<li dir="ltr">
<p dir="ltr">How to Apply</p>
</li>
<li dir="ltr">
<p dir="ltr">Complete a BSP Loan Application.</p>
</li>
<li dir="ltr">
<p dir="ltr">Submit copy of Title Deed confirming ownership of land/Lease is State owned.</p>
</li>
<li dir="ltr">
<p dir="ltr">Statutory declaration confirming acquisition is your first and will be owner occupied</p>
</li>
</ul>
<p> </p>
<h5 dir="ltr">Understanding ‘pre-qualification’ and ‘pre-approval’ </h5>
<p dir="ltr">Once you’ve met all the lender’s requirements, you’re given a pre-qualification letter saying you’re eligible to purchase a home up to a specified kina amount, although the pre-qualification does not guarantee the final approval of the loan.</p>
<p dir="ltr">At this stage, the lender is truly satisfied with your basic personal information, along with your deeper financial information - which may translate as your annual income history, recent bank account activity, and the likes. </p>
<p dir="ltr">In fact, between pre-qualification and pre-approval, the latter is more strenuous than the former, where it involves a more in-depth look at the costs and interest rates that the borrower will be meeting as part of the loan.</p>
<p dir="ltr"> </p>
<h5 dir="ltr">Approved</h5>
<p dir="ltr">With BSP, a borrower qualifies for a home loan once a down payment has been made - immediately - after every qualification requirement has been satisfied. The down payment assures BSP that the borrower is serious about owning the home.</p>
<p dir="ltr" style="text-align: center;"><img alt="" height="289" src="https://images.hausples.com.pg/blog/qlM6ZVkbV6e512cJHarCIxGkigWdGI7tjYUihlEC2qRJjYapolUIzabwsyAw7vjZmL96IFltGCnxyj6s_8CA15-6oJKvp-3pmzqvjcMd2FgkDEckdACwCblZPDcCgLREBqZUHU3T.png" width="624"/></p>
<h5 dir="ltr">The Bottomline</h5>
<p dir="ltr">Owning your own home is everyone’s dream. For some, it gives a sense of security. For others, it symbolizes accomplishment and prosperity. For a few, well, a shelter over their heads, a cozy corner to sleep in, a private space, will just about do it. With BSP’s First Home Ownership Scheme, you can turn these dreams into a truth.</p>
<p> </p>
<h5 dir="ltr">For more information, you can speak with BSP’s Relationship Manager or call BSP Corporate Banking toll free on 180 1100 or +675 305 7900.</h5>

First Home Ownership Scheme - What is it and how does it work

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