Up to 12 people can now apply for a single FNB home loan


  FNB has launched a stokvel-type of home-loan product, “an industry first” in SA's property lending market.

  The bank's new collective home loan is an attempt to help solve the challenge of the chronic shortage of affordable housing in SA.


  factors contribute to the problem, including that new housing stock is

  too expensive for many people, as well as the perceived risk of lending

  to middle low-income consumers.

  FNB's product seeks to solve the

  financing challenge. The bank will allow as many as 12 people to come

  together to apply for a bond. Buyers can team up with eight people,

  including spouses, when applying through digital channels – or 12 if

  they apply in a branch through a sales consultant.


  group can collectively decide how much each person will contribute

  towards the monthly instalment, and FNB said it can easily split the

  monthly debit order to suit the group's needs.

  Even though the

  product primarily wants to solve the challenge of financing affordable

  housing, FNB said it has designed it to serve more affluent customers


  Why collective buying?

  We know that

  this is something that is already happening. We know of stokvels,

  people buying properties together to enable access into homes. So, the

  collective buying value proposition was born from that, said FNB Home

  Finance Growth Head Mfundo Mabaso.

  He said because associating in

  groups is something South Africans love and do a lot of through

  stokvels, as well as burial and investment societies, it seemed like a

  sensible solution to bring to the mortgage space to enable affordability

  and homeownership.

  Mabaso said FNB spent some time testing

  whether this would work. Its observation of long-term trends confirmed

  that people who jointly apply for bonds have higher chances of getting


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  said another observation was that buyers in the low end of the market

  are generally looking for family homes. Many are collectively buying it

  as siblings or are co-applicants with their parents.


  Naidoo, CFO at FNB Savings and Investments, said this product also aims

  to give low-income earners comfort that should something go wrong, like

  retrenchment, they will have some financial cushioning and possibly

  avoid losing the roof over their heads.

  Risks and responsibilities


  once signed, a collective home loan will be a credit agreement like any

  other. So, applicants will need to go into it with people they really

  trust and those with strong credit profiles.


  the buyers will be jointly and “severally” (meaning each person will be

  responsible for their portion) liable for the debt. The downside of

  that is that if one person defaults on their monthly instalment – in the

  case of those who chose to split the debit order across all or multiple

  participants – the account will go into arrears if the other members

  cannot settle the shortfall.

  This will negatively impact the

  credit bureau profile of all participants in that arrangement, as

  everyone is jointly and severally liable for the loan as the bond and

  the property will be registered in each of the names, said Naidoo.

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