A pension backed loan FNB package is a type of housing finance secured by your retirement fund savings. If you have managed to save a sizable retirement fund over the years, you may be able to use this money as collateral for a home loan in South Africa.
There are several ways to enter the property market. You can buy a home using cash, a mortgage, or a pension backed loan. FNB’s pension backed financing enables you to purchase, renovate or even build a house from scratch.
What is a Pension Backed Loan FNB?
This is a loan issued and secured against your fund value. To qualify for this loan from FNB, you need to be a member of the fund. There also needs to be an agreement between the Fund, FNB, your employer, and the fund administration.
Please note that not all pension funds offer this benefit. You can only get this facility from FNB if it’s part of your fund rules. Therefore, before you go ahead and apply, you should check with your fund or employer first.
How to Use Pension Backed Home Loans FNB
According to the Pension Funds Act 24 of 1956, you can only use the money you get from the pension backed loan to:
- Buy a piece of land
- Buy a home
- Build a home
- Renovate your home
Why Choose the Pension Home Loan From FNB
The most attractive feature of this type of loan is affordability. This loan can help you turn your dream into a reality. If you have always wanted a home but didn’t qualify for a mortgage, or couldn’t save enough money to buy it for cash, this FNB’s pension secured home loan can make that happen for you.
What is the Pension Loan Term?
You have up to 30 years to pay back the FNB pension loan. However, the loan term may vary depending on your fund’s rules.
How Much Can You Borrow?
The amount you get depends on the size of your retirement fund. The bank will also calculate how much you can afford based on your individual circumstance. They consider things like:
- Current debts
- Monthly expenditure
- Other sources of income
- The rules set by your retirement fund
In most instances, you will be able to get enough money to buy, build, or renovate your home.
How to Apply for the Pension Backed Loan FNB
There are three ways to apply for FNB pension backed housing loans:
Phone Application
You can apply for pension fund loans using your phone in three simple steps:
- Send an SMS with the word ‘Home’ to 30752
- Receive a response and wait for the call or further instruction
- Submit your loan application
Email Application
- Download the FNB pension backed home loans application form
- Send an email to smarthousingplansdocs@fnb.co.za.
- Wait for a response.
Application via Call Center
- Contact FNB’s call center at 087 736 6000
- Ask for an application form
- Fill out the application form and submit
Please note that you can not go to an FNB branch to apply for a pension backed loan. You can only submit your application via phone or email.
Pros and Cons of FNB Pension Backed Home Loans
Advantages of the pension fund loans:
- You can use the money as a deposit to purchase a home.
- Pension backed FNB home loans allow you to buy land, renovate your home, or build from scratch
- The loan is affordable. Interest rates and fees are low, and they can be negotiated by your fund.
- Changes in prime rates will only affect your loan term instead of the repayment amount.
- Your loan repayments are automatically deducted from your bank account after your salary reflects.
Disadvantages of Pension-Secured Home Loans From FNB
- You can only use the money to purchase land and property or to improve an existing home.
- The property you plan to pay for or buy must be in your name.
- You must pay back the total loan amount by the normal retirement age.
- If you default, you will lose your pension savings. This usually has tax implications.
Please note that this loan generally has more advantages than disadvantages. Things can only go wrong if you fail to stick to the terms and conditions of your agreement. Therefore, take time to understand how the loan works before you apply.
Requirements for Pension Fund Loans From FNB
These are the latest updated terms and conditions for pension-secured home financing from FNB. (August 2022)
- You should reside in South Africa
- Applicants must be over the age of 18
- You need to have a valid South African ID
- The property needs to be situated in South Africa.
- You must be a member of an FNB-approved pension fund.
- The property or land you intend to buy must be your primary residence.
- You should not be an employee of FNB bank.
- The minimum application amount is R5 000
Other Things You Need to Know
- Pension fund home loan benefits are non-transferable.
- You can use the loan to buy land, a new home, pay off an existing home loan, renovations, home maintenance, alterations, deposit a new home, transfer fees, and attorney fees, among other things.
- You can only make repayments using payroll deductions.
It’s important to take time to understand how this type of loan works. That way, your application process will be fast and your chances of getting approved will be higher as well.
Ready to Apply for a Pension-Backed FNB Loan?
To submit your application for a pension-secured home loan from FNB, you can visit their website. You will also find the complete list of instructions and a downloadable application.
For more retirement loan packages, check out our Sassa appeal for R350 infographic.
Are you interested in finding out more about home loans and other types of housing financing options? We would love to help you research and find out more information on this topic. Get in touch with us today to find out more about pension backed loans from FNB and other banks too. Did you know that standard bank offers the same facility?
