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Your Home Is Your Security
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15 March 2012

Buying a house is ensuring future security for you and your family.
Shelter like food and clothing, forms one of the most essential
needs for all human beings. This was a need well understood by the
Fiji Development Bank when it offered the various home loan
facilities between 1990–1996 and 2004-2008.
 
In January 2008, a directive from the Minister of Finance saw the
lending focus of the Bank change to what is now described as the
Focused and the Non-Focused Sector. Lending to home buyers by
FDB was suspended accordingly with no new lending offered to
this segment of the market since. The reinstatement of this facility
is currently under review. 

FDB does however, continue to manage its portfolio of existing
home loan clients and is all too familiar with the emotional trauma
that comes with the loss of such a valuable asset due to poor debt
servicing on the part of the client. The sale of homes through
private and mortgagee sales is the absolute last step in a debt recovery process that FDB goes through prior to committing to this
final course of action.
 
As a development financier, we cannot iterate enough how
important it is for home loan clients to maintain a relationship
with their account manager, especially at a time when you face
economic hardship, have recently lost your source of income or
cannot make payments on time. There is always room for
negotiation – a repayment holiday; an extension to your
repayment term, interest only repayment for a limited time etc. Be
mindful however, that there are limits to such graces.
 
However, before you embark on such an important financial
commitment, it is important that you first understand the terms
and conditions of your loan by asking your account manager the
following questions before signing:

1.  What is my repayment during the special interest offer
period?
2. What will my repayment be when that loan converts to the
variable interest rate? Check that you able to afford the new
repayment plan.
3. What are the penalties for late payment?
4. What are the recurring fees and charges? Negotiate those
charges that you think are excessive, irrelevant or
unnecessary. You may be pleasantly surprised by the
response!
5.  Ask yourself if you can manage your home loan repayment in
addition to all other regular monthly payments such as
utilities, education, groceries etc. Draw up a budget for
yourself.
6. What are my options should my account fall into arrears?
These questions are not exhaustive and should be accompanied by
you thoroughly reading your loan contract or obtaining legal advice
– you may also ask the Consumer Council of Fiji for their opinion.
 
In recognising the financial hardships by many of our home loan
clients, FDB lowered its interest rates for Choice Home Loan
(CHL) clients with effect from 1 December, 2011. The 1.5%
reduction applies across the board for the variable interest rate for
this portfolio and impacted as follows:

1.  All Choice Home Loans (owner occupier) from 10.25%  to
8.75%;
2.  Line of Credit (LOC – for owner occupier homes) from
12.50%  to 11%; and 
3.  Residential Investment Property loans from 10.75% to
9.25%.

To ease repayments and allow CHL clients with Letters of Credit
meet their financial obligations, the two loans were merged and the
interest rate adjusted accordingly. Additionally, the LOC and
Investment loans were reviewed individually with due
consideration to any impact such changes would have on FNPF
transfers and charges.

“Since the global financial crises started in 2008, interest rates
increased as a result of high cost of funds and tight liquidity and
this affected a lot of our home loan clients with repayments
increasing accordingly,” says FDB CEO Ratu Deve Toganivalu.
 
“The reduction in the interest rate will result in a reduction on the
repayment and hopefully this will alleviate some of the hardships
faced by many of our clients.”
 
You need not lose what you have worked so hard for, ask your bank
what your options are and move on from there. 
 

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