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Learn about Mortgage

Mortgage Pre-Approval

To be approved for a mortgage in Tanzania, every bank requires you to provide an identification card, which can be anything from your voter’s card, to your driver’s license to your passport. You also need to submit six months worth of bank statements, preferably from the bank that you are applying a loan from. From these bank statements, the lender needs to see a consistent source of income being deposited into your account. If you are employed you must show a copy of your employment contract, along with a verification letter from your employer to prove that you are an employee. If you own a business you need to prove your business is profitable, as well as provide your business license. Depending on your income and the amount of money you already have, this will determine how much financing you will get from the lender.

Mortgage Interest Rate

Mortgage rates can vary depending on the bank. Interest rates in Tanzania usually do not exceed 15 to 18 percent, but the rates also depend on the amount of your loan and how much you intend to reimburse each month. To ensure all Tanzanians are living in good conditions, the CRDB introduced Jijenge, a long term mortgage loan that has been helping many Tanzanians since 2013 with its 18 percent interest rate.

How Does Refinancing Work?

Refinancing options are available to those who have a good history of repaying other loans, i.e. your credit score. The procedure for applying for refinancing is almost similar to that of applying for a loan. People often opt to take the refinancing option if the mortgage rates are lower, so that they are then able to pay back the previous loan. As in any loan, be it a mortgage or a refinancing loan, it is most advisable to do as much research as you can and compare rates between institutions so that there are not surprises later on.

Frequently Asked Questions

What is a mortgage?

A mortgage is a loan that buyers can use to purchase a property, and that is secured against the property itself. If buyers cannot repay the debt, then the lender takes possession of the property.

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What is the maximum amount I can borrow?

The total amount you can borrow usually depends on your debt-to-income ratio or credit score, which is determined by the borrower's ability to repay their debt and their credit history. The monthly payment should generally not be more than a third of the borrower's gross income.

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Where can I get a mortgage?

Always use certified financial institutions, such as banks or credit unions, to avoid any scams.

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What are the different fees that apply?

The fees depend on the type of financial institution, but in addition to reimbursing the capital - the amount of money that was lent - borrowers usually need to pay interest every month that can be negotiated with the bank.

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What is the difference between a fixed and an adjustable interest rate?

In a fixed-rate loan, the interest rate remains the same for the whole duration of the loan. In adjustable-rate mortgages, the rate varies depending on the economics and monetary policy of the country.

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What happens if I cannot pay my debt?

The lender may foreclose and seize the property, which will become their possession.

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Do I need mortgage insurance?

Usually no. However, if the amount of money needed is very high compared to your income or your capital, then financial institutions will ask you to take out mortgage insurance.

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What is the best time to get a mortgage?

You should wait until you have a regular source of income to take out a mortgage. A period of high inflation is also usually beneficial for debt owners, since inflation reduces the debt burden in real terms, and debts are generally not indexed to inflation.

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How much capital do I need to be granted a mortgage?

The more capital you bring, the lower your interest rate will be. Banks usually require a minimum amount of capital, often around 20 percent of the total amount of the loan.

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How does Refinancing Work?

Refinancing takes the current debt and changes its terms and conditions into an entire new different debt, with new obligations.

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