Home Loan Or Housing Loan?

• 31 December 2015
• Property Focus
• 2136 Views

Housing loan and home loan are terms often synonymously used by banks. Canadia Bank Plc, however, has distinguished them clearly.

Established in 1991, and with branches nationwide, Canadia Bank offers three types of loan; Small and Medium Enterprise (SME) Loans that target micro and medium businesses; Commercial Loans that finance other businesses’ purposes; and Home and Consumer Loans, for personal purposes including residential-related finance.

At Canadia, housing loans and home loans come under the Home and Consumer Loan category, which specifically serves separate services based on the bank’s unique business platform. Unlike other banks, which act solely as financial services providers, Canadia Bank’s major subsidiary is the Overseas Cambodian Investment Corporation (OCIC); the nation’s largest developer behind development projects such as Diamond Island, Olympia City, Chroy Changvar Satellite City, and others.

According to Long Chhay, Head of Housing Loans, Consumer Banking at Canadia Bank, housing loans are provided to borrowers who aim to purchase residences in OCIC projects, while home loans target customers who purchase homes in residential developments besides OCIC.

For housing loans, customers can request up to 70% of the unit value from Canadia Bank, by using the title deed as collateral. The bank charges 10% interest on loans for up to 15 years.

For home loans, since they target customers of other developers, Canadia’s loan amount differs based on respective projects with terms of up to 15 years and an interest rate of 9%.

“The procedure to apply for either loan is largely similar. But unlike a home loan where customers need to have clear documentation to specify which home they will buy with legitimate ownership transfer documents, housing loan customers face less difficulty since the house they are buying is under the bank’s direct supervision,” he said.

Chhay reported that last year, Canadia Bank’s housing loans valued over US$70 million with over 1,000 mostly Cambodian customers, compared to over US$4 million for home loans.

The bank also recorded a 50% surge in home loans in the first 5 months of this year, against the same period last year. This year, Canadia plans to offer US$20 million in home loans, while the number of housing loans is dependent on sales of the bank’s development projects.

Mr. Long Chhay, Head of Housing Loans, Consumer Banking at Canadia Bank