Save-to-own product boosts mortgage lending

The Save-to-Own Mortgage product, recently launched by GHL Bank, simplifies the application process, thereby making it easy for potential homeowners, especially SME business owners, as well as non-resident Ghanaians, to own property in Ghana.

Financial institutions typically focus on salaried workers in their loan marketing. This is no surprise, as salaried workers give lenders confidence in their ability to pay back due to their steady flow of monthly income throughout the year.

Unfortunately for the self-employed individuals like small business owners, this is not the case. Most banks and lending institutions will not extend a loan unless there are fully convinced that the borrower is able to meet his/her monthly obligations.

In Ghana, there is a general perception that small business owners and self-employed professionals have unpredictable monthly income.

This has made access to credit often quite difficult for this category of loan applicants.

It is a fact that when offered credit, SME business owners often borrow at exceptionally high-interest rates.

When one considers that some 80% of all Ghanaian companies are in the SME category, it is critical that they receive the right kind of credit.

The Save to Own Mortgage product seeks to lead this trend and make it possible for creditworthy applicants to have access to competitively priced mortgage loans in order to acquire property and support their business.

GHL Bank has analysed data over a decade of mortgage lending to design this hybrid product, which requires the applicant to make 12–24 months of deposits after which a mortgage loan is automatically approved to facilitate the home purchase.

The product is designed to allow the applicant to convince the bank that they can comfortably make monthly repayments if granted the loan.

The initial market response has been very impressed with several applications already approved and hundreds more in the processing pipeline.

Since transforming from Ghana Home Loans to GHL Bank in December 2017, the bank continues in its commitment to deliver affordable homes and other universal banking services to all Ghanaians.