The purchase or construction of a house in today’s era has been simplified. This is because there is a Home Ownership Loan program, abbreviated as KPR, which can be used by the public. Undoubtedly, KPR has succeeded in attracting the attention of people who want to build or buy a new home. KPR itself is a fairly good program to discuss. Therefore, those who have not yet used it can solidify their decision on whether to choose KPR or not. To learn more about the definition of KPR, read the following review.
Understanding Home Ownership Loan (KPR)
The purchase of a house is conducted by the seller as the homeowner, with the buyer being the person who will purchase the house. After the price is agreed upon, the buyer hands over a sum of money according to the price, and both parties sign the deed of sale. The role of the banking institution providing a Mortgage Loan (KPR) in this buying process occurs when the buyer does not have funds matching the selling price. KPR, or mortgage credit, is a credit facility from banks for individual customers who need funds for renovation or even to buy a new home. Since it is a credit, customers must replace the used funds with installments or payments. Almost all banks in Indonesia have Home Ownership Loan (KPR) programs with varying interest rates. The customer base is also very broad and spans various professions such as civil servants, private employees, medical professionals, and others. In other words, all segments of society can obtain this credit with specific requirements. In the application process, there are several documents that must be fulfilled as KPR requirements. Among them are ID cards, family cards, Tax Identification Numbers (NPWP), income certificates, or pay slips. To get KPR approval, most banks in Indonesia also review the credit history of the prospective borrower before deciding to grant the mortgage loan. So, if you have previously applied for or settled installments such as credit cards, car loans, motorcycle loans, with a good payment record, your chances of getting KPR approval from the bank are higher. Some benefits of using the KPR facility include not having to provide the entire amount in cash to buy a house. The customer only needs to provide a down payment. Considering the long-term scheme of KPR, the paid installments can be accompanied by the expectation of an increase in income. On the downside, conventional KPR requires customers to have a steady income. Therefore, informal workers with irregular income may face challenges in accessing this KPR.
Types of Home Ownership Loans (KPR)
There are two types of KPR circulating in Indonesia: subsidized KPR and non-subsidized KPR. These credit variants are differentiated based on the social status of individuals who will use the credit service. Here are the types of KPR along with their explanations.
- Subsidized KPR
Subsidized KPR is a loan for building houses provided to customers whose social status is in the middle to lower class. Subsidies ease the credit and add funds for building or renovating homes for the target group of low-income communities (MBR). This subsidized credit is separately regulated by the government, so not every individual applying for credit can be granted this facility. The type of subsidy depends on the banking institution that issues the program. It could be in the form of subsidized house prices, interest rates, total installment amounts, or other factors.
- Non-subsidized KPR
The second type of home ownership loan is non-subsidized KPR. From its name alone, it can be understood that this credit is free from all banking assistance. It can also be said that non-subsidized KPR is the opposite of subsidized KPR, as explained in point 1, and is intended for all segments of society, including apartment ownership loans (KPA). The terms of KPR are set by the bank, so the determination of the amount of credit and interest rates is done according to the policy of the respective bank. Non-subsidized KPR is usually given to customers with middle to upper-class social status. Home ownership loans are released to facilitate bank customers who want to buy a new house but have a limited budget. As the concept of the agreement is in the form of credit, customers must pay the down payment complete with interest charged after receiving the money. On the other hand, generally, KPR applicants will be charged several fees, including appraisal fees, notary fees, bank provisions, fire insurance fees, and life insurance premiums during the loan period.
Home Ownership Loan (KPR), Subsidized KPR, Non-subsidized KPR