Uganda mortgages 'are still unsuitable'

Sep 02, 2010

The range of mortgage products available in Uganda is still not suitable for the majority of the homebuying market, it has been suggested.

According to Ugandan newspaper the Independent, the financial products on offer are targeted at those earning salaries, which is only a small proportion of the public. Mortgages are also "obscure" and slow to be processed by lenders, the news source stated, with one homeowner, Joseph Kironde, being quoted as saying he struggled when securing finance to purchase his house. "I can't recount the number of times I had to borrow from friends to educate my children and take care of other needs," he stated, adding: "A mortgage requires sacrifice and discipline."

The average interest paid on a mortgage in Uganda is 16 per cent per annum and under bank rules, the home loan repayments that will take place over a pre-agreed period have to be met, with no exceptions.

An online calculator provided by Housing Finance Bank - which is 49.18 per cent owned by the country's government - shows a client who is granted a five-year, 20 million Ugandan shilling (€6,909) mortgage will have to make monthly payments of 486,361 Ugandan shillings over the period of the agreement.