Property News Magazine - Edition 387 - 21 July 2017

THINKING OF BUYING A SECOND
OR SUBSEQUENT HOME?
BANKING INSTITUTIONS ACT NO 2 OF
1998:
As from 22 March 2017, prospective
home loan applicants of second or
subsequent residential properties are
required to pay a percentage of the
purchase price or market value of the
property as a deposit.
The commercial bank providing the loan
to the prospective buyer will nance the
remaining percentage of the home loan.
This is known as a Loan-to –Value ratio or
LTV. For example: For the purchase of a
second residential property, the LTV ratio
is set at 80% of the purchase price or
market value of the property. For
instance, if the value of the second
property is N$ 1 000 000-00, the bank will
nance N$ 800 000-00 and the buyer will
be expected to pay a deposit of 20%
(N$ 200 000-00) upfront.
These regulations are applicable to the
following:
1) Close Corporations where the member
has more than 50% member's interest
(Reg 2.4)
2) Purchase of a non-primary residence
(Reg 2.1)
DR WEDER, KAUTA & HOVEKA INC
LEGAL PRACTITIONERS NOTARIES CONVEYANCERS
www.wkh-law.com
These regulations are inapplicable to
1) Members of a Close Corporation with
50% or less member's interest in a CC
2) Close Corporations with no single
member having more than 50%
member's interest,
3) Commercial properties
4) Agricultural land
5) Purchase of a primary Residence
6) Private and Public Companies
7) Trusts
The regulations are only applicable in
Namibia. Property owners in
neighbouring South Africa, for example,
who apply for loans in Namibia are only
examined on residential property owned
in Namibia.
A customer is only able to obtain a full
mortgage loan once for the purchase of
a primary residence and in all
subsequent applications, the customer
will have to disclose in such second loan
application that he/she is living in a
primary home.
A banking institution may not disburse a
loan for the purchase of a non-primary
residential property if the deposit is
nanced through:
1) Equity resulting from the difference
between the current value of the existing
property of the customer and the amount
owed on that property or-
2) Any funds borrowed from any nancial
institution, such as an existing overdraft
facility to top up for the purchase of a
secondary residential property.