Banks that provide home loan facilities for Pakistan real estate

Inflation and economic instability in Pakistan have made it difficult for home buyers to purchase their dream homes without financial aid. Fortunately, many banks in Pakistan provide home loans to help their customers purchase shelters for themselves. These banks are one of the major hope for middle-class families to buy a home and pay the loan in installments. We have dedicated this blog to enlightening you about the banks that provide home loan facilities for Pakistan real estate.

Before applying for home loans in Pakistan, let’s begin with what you should consider.

Key Aspects to Consider Before Applying for Home Bank Loan in Pakistan

1. Loan Eligibility

• Income Stability

Remember that ban doesn’t give loans to every dick and Harry. They assess your income stability to ensure you can pay back the debt. Though both self-employed and salaried individuals can apply, the requirements are different.

• Employment Duration

You should have at least 2 years of job serving experience and 3 years of experience if you run a business.

• Credit History

A good credit history means more chances of loan approval and less interest rate.

2. Interest Rate

Banks practice two types of interest rates.

• Fixed Vs Variables

Fixed loans mean banks will offer a fixed loan; however, in the latter case, the loan amount can fluctuate according to the market trend. The fluctuation usually complies with the Karachi Interbank Offered Rate.

• Rates Comparison

It is always wise to compare the interest rates of different banks and then opt for the one that best suits your finances.

3. Loan Tenure

• Loan Payment Duration

The typical loan rate in Pakistan varies from 5 years to 25 years.

• Short Vs Long Term Loans

Shorter loan payment tenures mean higher monthly instalments and lower interest rates. Long tenures lead to low monthly instalments and increased overall loan rates.

4. Loan-to-value ratio (LTV)

• Downpayment

It is important to know that banks usually offer 70% to 85% loans on the total value of the property and expect the applicant to pay a 15%-20% downpayment.

• Higher Laon-to Value Ratio

If you pay the minimum downpayment required, you can get the maximum loan amount eligible but at higher interest rates.

5. Loan Processing Fees

• Upfront Fee

Upfront fees include application processing, legal, and property appraisal fees. Different banks have different fee structures, so it is best to look for hidden charges. 

• Documentation

Stamp duties, notarization, and insurance are some additional documentation charges.

6. Prepayment & Early Settlement Penalties

• Early Repayment Options

Some banks allow early repayment without penalties, whereas some charge fees for early repayments.

• Partial Payment

The terms for partial payment differ from bank to bank; however, it reduces the loan interest and amount.

7. Shariah Compliance Option

• Riba Free Financing

Riba means interest. Islamic banks offer Riba-free financing; you must consult the bank for the details.

• Islamic Financing

Bank Islami, Dubai Islamic Bank, and Meezan Bank offer Islamic financing. They diminish Musharakah. Consult the banks for more details.

Also Read: Setting Strategic Marketing Goals for Real Estate Success in 2025

8. Documentation & Property Valuation

• Property Appraisal

The bank conducts an appraisal to assess the property’s market value. This is to ensure that the documentation of the property the applicant wishes to purchase is complete.

• Legal Title

The bank ensures the property has a proper legal title and that there are no disputes that can delay loan approval.

9. Insurance Requirement

• Property Insurance

Banks usually prefer insurance to provide protection against damage and outstanding loans in case of the applicant’s death.

• Cost Consideration

Cost consideration is an important factor in the insurance premium. It adds to overall loan expenses.

10. Affordability & Monthly Payments

• Debt-to-Income Ratio

Your monthly debt obligations should not exceed 40-50% of your net income.

• Budget Considerations

Ensure you are not getting out of budget by calculating the monthly installments with your budget.

8 Prominent Banks That Offer Home Loans in Pakistan

Below is the list of prominent banks that offer home loans in Pakistan;

1. Meezan Bank

• Loan Type: Easy Home Islamic Financing
• Loan Tenure: Up to 25 years
• Financing Limit: Rs. 500,000 to Rs. 50 million
• Shariah-Compliant: Based on diminishing Musharakah
• Interest Rate: Competitive Islamic markup rates
• Eligibility: Available to salaried and self-employed individuals

Features:

• Home purchase, renovation, and construction financing
• No processing fee
• Flexible repayment terms

2. Habib Bank Limited (HBL)

• Loan Type: HBL HomeLoan
• Loan Tenure: Up to 20 years
• Financing Limit: Rs. 3 million to Rs. 100 million
• Interest Rate: Variable, based on KIBOR (Karachi Interbank Offered Rate)
• Eligibility: Salaried individuals, self-employed professionals, and business owners

Features:

• Loan-to-value (LTV) ratio up to 80%
• Early repayment option
• Financing for both the purchase and construction of homes

3. MCB Bank

• Loan Type: MCB Home Loan
• Loan Tenure: Up to 20 years
• Financing Limit: Rs. 500,000 to Rs. 50 million
• Interest Rate: Based on KIBOR
• Eligibility: For both salaried and self-employed individuals

Features:

• Financing available for buying, constructing, or renovating property
• Competitive rates with adjustable repayment options
• Early settlement facility

4. United Bank Limited (UBL)

• Loan Type: UBL Address Home Loan
• Loan Tenure: Up to 20 years
• Financing Limit: Rs. 500,000 to Rs. 20 million
• Interest Rate: Floating based on KIBOR
• Eligibility: Available for salaried professionals and self-employed individuals

Features:

• Up to 85% financing for home purchases
• Early repayment option
• Available for purchase, construction, and renovation of property

5. Askari Bank

• Loan Type: Askari Home Finance
• Loan Tenure: Up to 25 years
• Financing Limit: Up to Rs. 35 million
• Interest Rate: Variable rate
• Eligibility: Salaried professionals and business owners

Features:

• Financing for home purchase, construction, and renovation
• Low down payments
• Option to transfer home loan from another bank to Askari

6. Allied Bank Limited (ABL)

• Loan Type: ABL Home Loan
• Loan Tenure: Up to 25 years
• Financing Limit: Rs. 500,000 to Rs. 40 million
• Interest Rate: Floating KIBOR-based rate
• Eligibility: Salaried professionals and business owners

Features:

• Financing available for home purchase, construction, and renovation
• Flexible repayment plans
• Up to 85% financing of property value

7. Bank Alfalah

• Loan Type: Bank Alfalah Home Finance
• Loan Tenure: Up to 25 years
• Financing Limit: Rs. 500,000 to Rs. 50 million
• Interest Rate: Floating rate linked to KIBOR
• Eligibility: Available for salaried and self-employed individuals

Features:

• Financing for home purchase, construction, and plot plus construction
• Flexible payment options with instalment deferment during construction

8. Standard Chartered Bank

• Loan Type: Standard Chartered Home Finance
• Loan Tenure: Up to 25 years
• Financing Limit: Rs. 3 million to Rs. 100 million
• Interest Rate: Variable interest rate
• Eligibility: For salaried professionals and self-employed individuals

Features:

• Home purchase and construction financing
• Flexible installment plans
• Financing up to 80% of property value

Wrap Up

Seeking bank loans to finance your home is not a bad idea. You need to do thorough research to compare the features and financial aid different banks provide. Besides, considering the home loan compliance with shariah, loan-to-value ratio, and repayment options are also worth considering.