Subsidized interest loans mean that the interest on a loan obtained by a borrower from a commercial bank is fully or partially borne by the relevant government agency or civil society organization, and the borrower only needs to return the principal or a small portion of the interest in accordance with the agreement. If home buyers can apply for subsidized loans, they can reduce a lot of pressure, but it will take time for the policy to be implemented.
The new policy of subsidized interest loans for Guangzhou provident fund was formally implemented on Oct. 26, and in principle, as long as people meet the application requirements, they can apply to the accepting banks. However, it is expected to be a week, the new policy can be widely spread. It is understood that at present there are China Construction Bank, Bank of China and Guangzhou Agricultural and Commercial Bank of three banks can accept the subsidized loan business.
In addition, with the implementation of the provident fund personal loan maximum amount of upward adjustment, personal maximum loan amount up to 600,000 yuan, two people at the same time apply for a maximum loan of 1 million yuan. Guangzhou provident fund center said, as long as the application has not yet approved loans will be approved in accordance with the latest amount of standards.
Last year, demand for provident fund loans soared because of high interest rates on commercial loans and the difficulty of obtaining a loan, which at one time made the loan amount in short supply. However, since November last year, the central bank has cut interest rates six times in a row, and the current interest rate for loans of five years and above is 4.9 percent, plus preferential discounts from banks, calculated at the prevailing 10 percent discount, the interest rate is 4.41 percent, narrowing the gap with the CPF loan rate of 3.12 percent to 1.29 percent. As a result, the focus on provident fund loans has dropped significantly this year compared with last year.
For buyers, what is the difference between using a CPF subsidized loan and applying for a direct CPF loan?
Several mortgage company sources said that because the subsidized loans are only for portfolio loans, the biggest advantage may lie in the shorter disbursement time. Some industry insiders said that since the CPF center canceled the bank acceptance business, the approval speed is much slower than before, and now the time spent on both pure CPF loans and combination loans is three months or more. He expects that if he applies for a combination loan by way of a subsidized loan, he will be able to disburse the money in about one and a half months at the best. A number of banks and provident fund centers said they could not say how long it would take to disburse the money because there have been no successful applications in the market.
It is worth noting that while subsidized loans allow buyers to enjoy the low CPF interest rates and faster disbursement of funds, there are certain risks involved. Once the loan-to-deposit ratio reaches 70% or below, the subsidized loan will be forced to be converted into a commercial loan, and the CPF management center will no longer provide the subsidized interest rate service. As you can see, subsidized loans have their own advantages and disadvantages, and not at random, home buyers need to choose according to their own actual situation.
(The above answer was posted on 2015-11-17, the current relevant housing policy please prevail in practice)
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