BB relaxes home loan repayment after rescheduling
The facility has been introduced to help borrowers maintain repayment capacity after rescheduling and to encourage regular payment of instalments on rescheduled loans
The central bank has relaxed repayment conditions for home loans after rescheduling. From now on, customers will receive special concessions for first- and second-time rescheduling of home loans.
According to the new circular, if a customer defaults on a home loan, they will receive additional time equivalent to 30% of the remaining loan tenure at the time of first rescheduling. In each case, a six-month grace period will also be allowed.
In other words, if a customer has a 20-year home loan and defaults after 10 years, then for first-time rescheduling the customer will get the remaining 10 years plus an additional 30%, or three more years. As a result, the customer will get slightly more than 13 and a half years in total.
Previously, the maximum time allowed for rescheduling a home loan was limited to six years.
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The central bank said the facility has been introduced to help borrowers maintain repayment capacity after rescheduling and to encourage regular payment of instalments on rescheduled loans.
The circular states that if a home loan is rescheduled for a second time, the customer will receive an additional 20% time on top of the remaining loan tenure. However, for third and fourth-time rescheduling, the customer will only be allowed the existing remaining loan tenure.
It is also specified that the maximum loan recovery period must be capped within the borrower's age of 65 years. Under no circumstances can the final instalment date exceed the borrower's 65th birthday.
A senior Bangladesh Bank official told TBS that home loans are generally taken by people with fixed incomes. If, for any reason, a loan becomes classified, there is a risk of repayment failure after rescheduling due to a shorter remaining tenure. Therefore, the post-rescheduling repayment period has been extended to facilitate loan repayment.
Although the rescheduling tenure has been extended, the down payment requirements remain unchanged. Accordingly, for first- and second-time rescheduling, borrowers will have to pay either 7% of the overdue amount or 4% of the total outstanding loan. For third and fourth-time rescheduling, an additional one year will be added to the conditions applicable in the first two instances.
