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January 1, 2010

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Home » Business » Real Estate

Trim in housing loan ceiling

A new policy which reduces the mortgage ceiling for certain home buyers in Shanghai was revealed by the Shanghai Provident Management Center yesterday.

The mortgage ceiling in the city's housing fund program has been cut to 400,000 yuan (US$58,565) for second-time buyers from the previous 600,000 yuan if at least two people cover the repayment.

For those with an extra funding account, the ceiling has been trimmed to 600,000 yuan from the previous 800,000 yuan.

If only one person is to cover the mortgage repayment, the ceiling is now 200,000 yuan, a drop from 300,000 yuan. For those with an extra account, the ceiling is cut from 400,000 yuan to 300,000 yuan.

The new policy is effective from today to December 31 and came just one day after the city government announced a series of loan and tax initiatives designed to curb speculation amid soaring home prices.

For first-time home buyers, however, the 600,000 yuan mortgage ceiling remains if two people cover the repayment and families with an extra funding account will continue to be eligible for a maximum loan of 800,000 yuan.

If one person covers the repayment, the ceiling remains at 300,000 yuan and a maximum loan of 400,000 yuan is allowed if the person has the extra funding account, according to a statement on the Website of the local industry watchdog yesterday.

In January 2009, Shanghai raised the mortgage ceiling in its housing fund program for second-time buyers from the original 400,000 yuan to 600,000 yuan if their loan for the first home was paid off, a move to raise home sales.

The new policy announced yesterday also stipulated that for first-time buyers of ordinary housing as well as second-time buyers whose current per capita space is below the city's average, a 20 percent down payment remains unchanged.

In Shanghai, employees covered by the public housing fund system, which gives more favorable lending rates than commercial banks, pay 7 percent of their monthly salary to the fund and their employers are required to match the amount. Employees can also pay an extra 1 to 8 percent of their monthly salary to the fund and their employers also need to match the amount.


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