Being of Generation Y (Gen Y), I always wondered how and when I will be able to afford to build my own house. This was also a worry even among my friends and we would often discuss it at our local church Pennywise over some holy drinks. For some who might be wondering what Generation Y is, it is G30 or the generation which is currently in their 30s or born in the 80s. Gen Y is characterised by being tech savvy and in Zimbabwe, also being formally unemployed and without title deeds to their name. To give you some perspective of the employment rate; in my Kutama College class of 2002, out of 100 or so students that we were; about half are residing outside Zimbabwe, and of those still living in Zimbabwe – about 30 or so are formally employed locally with the rest being either their own bosses or completely unemployed. This is besides almost all of us having professional qualifications in our different fields of work.
Gen Y’s exquisite taste
As a direct result of the above (being professionals) as Gen Y we do not want to go and stay in the high density areas. I mean, most of us grew up in the ghetto, and we are now professionals, going back to the ghetto is the last thing on our minds. At the same time G30 is a significant economic contributor (behind G40 of course, lol, havatauri vachidya) and this background is probably what led to the success of land development projects like Madokero whilst the CABS Budiriro houses are still after 18 months on the market heavily under-subscribed to. G30 as professionals would also want to live in a home which reflects the credentials. At the same time this way of thinking among G30 leads my generation to renting homes for $500-$700 per month, which all things being normal, this money should be channeled towards equity in your own house.
To Gen Y’s relief, Mai Mupfumira the Minister of Labour and Social Welfare; who also happens to be my homie; coming from the same rural village in Mhondoro; unveiled National Building Society (NBS) early this year. NBS gives home loans to individuals at a reasonable rate of 9.5% pa for high density and 11.5% pa for low density. The quantum of the mortgage loan is a direct function of your gross monthly salary by a factor of 39.4 times for low density and 45.8 for high density. For example, if your monthly gross salary is $1,200 and you wish to apply for a low density loan, then multiply that by 39.4 to get $47,280. Your repayment then is a function of your age and how many employable years you still have given the “new” retirement age of 55 years. For someone who is 30 years old with the above scenario, the repayment installments would be around $480 per month.
So lets say you buy a stand with title deeds in areas such Madokero, Sunway City, Ruwa, Mainway Meadows etc which are all decent middle income neighborhoods. Stands in these areas typically average between 400 – 800sqm and close at an average $20,000 despite being advertised by estate agents in the range of $30-$40k. A friend of mine just recently closed a deal on a 2,000sqm property in Sunway City for $20,000 and he paid a deposit of $10,000 with the balance paid over 12 months. Now that you have a stand with title deeds you can then mortgage the land with NBS, which saves you from raising the 25% deposit needed in cash for borrowers without freehold land. All you have to do now is raise the 10% needed for legal fees which on a loan of $45,000 is $4,500, surely Mr/Mrs Entrepreneur can figure out a way round this. A typical 3 bed house in mid suburbs with combined lounge and dining suite and one bathroom costs approximately $45,000 including fittings. And from a little ingenuity you have gone from paying your landlord $500 a month to paying that amount towards your home equity. All that is needed is a little hard work and reading SMEZIM religiously, lol!
How to access NBS mortgage facilities
Entrepreneurs can open their corporate account with NBS, and create a trade history with the bank for about three months. At the same time, also open a personal account which your business will deposit your monthly salary. If your business provides a strong trading pattern and your personal salary is paid on time; you will surely be approved for the mortgage scheme assuming you meet the deposit and legal requirements. For those formally employed, it’s even easier, all you have to do is simply open your personal account with NBS and after three months of consistent salary deposits you will can apply for the facility. In the event that your company decides to support its employees by opening a corporate account with them and abiding to certain criteria dictated by the bank and underwriting their employees’ loans, you can also qualify for zero deposit and simply raise the legal and valuation fees to be able to access the mortgage credit.
Is NBS the answer?
By most accounts, YES, NBS is an answer to Gen Y’s housing problems. But just like it was traditionally, a little hard work is required to be put in to be eligible for the facility in terms of the deposit requirements and the monthly installment repayments. I encourage my fellow G30s to take advantage of the NBS facility whilst the bank still has the resources. We have waited for approximately 10 years for a bank offering descent mortgage rates to come to town and let us fully take advantage of this great opportunity. Currently, NBS only has two branches in Harare and Bulawayo. Visit your nearest branch to find out more about this exciting opportunity.