KARACHI, July 14: The House Building Finance Corporation is providing the cheapest housing finance against all those who are presently offering the same finance on floating rates that are linked with T-bills and PIBs.

The HBFC also gives a moratorium period from 12 to 24 months after the expiry of completion period and only a rental share is paid by the borrower who is a partner in the new scheme called 'Ghar Aasan.'

HBFC managing director B.H. Qureshi on Wednesday told Dawn that for an initial period of two years, the corporation only took rental share that stood at around five per cent.

Thereafter, he said under the Ghar Aasan scheme, the HBFC would also share the ownership of a house in proportion to its investment in total cost of a house that went up to 12 per cent only.

He said the Ghar Aasan scheme was prepared by the HBFC in compliance with the Supreme Court decision that was based on "Diminishing Musharaka" and was implemented in March 2002.

Mr Qureshi said the HBFC was the only institution that had arranged group life insurance of the partner or the guarantor to cover the entire investment made by the corporation.

In case of death of the insured person during the period of investment, the claim received from the insurance company will be adjusted against the outstanding balance and any amount in excess of the outstanding balance will be paid to the legal heirs of the partner.

"Some drastic changes have recently been made in the scheme to meet the fast changing requirements and rising cost of construction." He said the HBFC board had enhanced investment ceiling from Rs2 million to Rs7.5 million in the urban areas and investment limit of Rs300,000 in tehsil had been increased up to Rs500,000.

Responding to a question, the HBFC chief said that debt equity ratio, which was 50:50, had been revised to 80:20. The house purchase facility, which was previously available only in major cities, has been extended to all urban areas, he maintained.

Similarly, he said under the 'Shandar Ghar' scheme, an owner could undertake repairs, renovation and home improvement, which is also based on Islamic mode of investment, "Murabaha".

Mr Qureshi said an mount of Rs0.5 million could be taken under this scheme and repayment period had been extended to 10 years from five years. Under the Ghar Aasan scheme, he said the HBFC from March 2002, when the scheme was launched, to June 2004 disbursed Rs2671 million and under the Shandar Ghar scheme, from April 2003 to June 2004, disbursed Rs418 million.

Explaining the HBFC relief package for 2004, he said borrowers under the old schemes i.e. those launched between July 1, 1979 and June 30, 2000, would benefit as per the federal government's announcement in the budget 2004-05.

The HBFC managing director said the relief package was divided into two parts - one dealing with time expired cases and the other with time remaining cases. With respect to time expired cases, he said a further concession had been given so that the amount owned to the HBFC as on June 30, 2004 shall stand frozen.

It can be repaid over 36 equal monthly instalments from July 1, 2004 through 36 post-dated cheques of equal amount. Mr Qureshi further said that for these cases no recovery action would be taken during this period unless the customer again dishonoured the new arrangements. In this case the defaulter will have to face usual recovery action.

With respect to time remaining cases the balance due as on June 30, 2004 will be paid in equal instalments over the remaining period of the loan. In addition, instead of charging the old rates, effective from July 1, 2004, the accounting rate will be reduced to 10 per cent over the remaining period of loan. The amount is to be paid by deposit of post-dated cheques and signing of a modification agreement, he added.