Home loans in Bangladesh: eligibility, EMIs and the questions to ask

How much can you borrow?

Banks and non-bank financial institutions lend a portion of a property's value and expect you to fund the rest. The share they finance — the loan-to-value ratio — is limited by regulation and by each lender's own policy, and for home loans it is commonly up to about 70% of the value the lender assesses, which may be lower than the price you negotiated. The balance, plus registration costs, comes from your savings.

Lenders also limit your repayment relative to income. Many will not approve an instalment above roughly 40–50% of your verified monthly income after existing loan repayments. Salaried applicants, business owners, professionals and non-resident Bangladeshis are all eligible, each with different paperwork.

What an EMI really costs

An equated monthly instalment (EMI) repays interest and principal together over the loan term. Early instalments are mostly interest; later ones are mostly principal. A loan of ৳40 lakh at 12% a year over 20 years has an EMI of about ৳44,000, and you would repay roughly ৳1.06 crore in total — more than two and a half times the amount borrowed.

A shorter term raises the EMI but cuts the total interest sharply. The same ৳40 lakh over 15 years costs about ৳48,000 a month and around ৳86 lakh in total. Ask every lender for the full repayment schedule, not just the monthly figure.

Variable rates and the fine print

Most home loans carry a variable rate that moves with the lender's reference rate, so your EMI or your term can change during the loan. Ask how often the rate is revised, how you will be told, and whether the lender extends the term or raises the instalment when rates rise. Then compare these costs, which rarely appear in advertisements:

• Processing and documentation fees, usually a percentage of the loan.
• Charges for early settlement or partial prepayment.
• Compulsory property or life insurance, and who chooses the insurer.
• Penalty interest on late instalments.

Loans for flats under construction

For a flat that is still being built, lenders usually disburse in stages against construction progress, often under a tripartite agreement between you, the developer and the lender. You pay interest only on the amount disbursed so far.

Land-share projects add a question worth asking early: some lenders will finance against your registered land share and the staged construction, while others lend only once a flat is complete and partitioned. If your lender will not finance until handover, plan to fund the construction instalments from savings and refinance later.

Documents to prepare

A pre-approval before you book lets you negotiate knowing exactly what you can afford. Lenders typically ask for:

• Your national ID card (or passport, for non-residents) and recent photographs.
• Your TIN certificate and proof of tax return submission.
• A salary certificate and six to twelve months of bank statements, or a trade licence and business statements if you are self-employed.
• The property documents: booking or allotment papers, the land deed and mutation, the approved plan and the developer's no-objection letter.