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Business Reporter
ZIMBABWEAN entrepreneurs have been urged to take advantage of home equity loans being offered by the banking sector to finance their businesses and help develop the economy.
A home equity loan is a loan facility in which the borrower uses the equity of his or her home to borrow while equity is defined as the current market value of a home minus any outstanding mortgage balance.
As a fixed asset, a person’s house has the capability to move a business from one level of financial freedom to another through enhanced access to home equity loans.
Stanbic Bank is one of the few banks offering high value equity loans and has invited small businesses seeking funding to approach its branches for assistance.
Head of personal and business banking for Stanbic Bank, Mr Patson Mahachi, said: “Home equity is basically the current market value of your house compared to the price you bought it. Essentially the property would have appreciated in value over time”.
Several financial institutions recently added this product onto their offerings but the values they offer differ across the market.
“You will find that some institutions offer 20 percent or 30 percent of the assessed value of your property, but we offer up to 50 percent,” said Mr Mahachi.
“Our offering is very competitive in the market and we would like to keep it that way to allow customers access to funds that will allow them to adequately cover their financial needs.”
According to Stanbic, several people have managed to use these funds to start businesses or add capital to expand their existing businesses successfully.
“This is a great way to invest the funds because it makes it possible to make profits that will cover the interest costs of the loan,” explained Mr Mahachi.
He added that people were also free to use these funds for anything else as long as it was legal, for example, covering school or university fees payments, settling medical bills and paying off other debts. Stanbic has said a home equity loan requires no deposit and can have a maximum tenure of 10 years.
Online Reporter