Products Summary

Tanzania Mortgage Refinance Company Limited (TMRC) provides long-term funding solutions to eligible banks and financial institutions to support the growth of housing finance in Tanzania. TMRC’s products are designed to expand access to mortgage financing and housing microfinance by enabling participating institutions to offer longer-term and more affordable housing loans to their customers.

1. Mortgage Financing

Mortgage financing targets medium- to high-income final beneficiaries through participating banks and financial institutions. Under this product, TMRC offers refinancing and pre-financing facilities that support the expansion of mortgage loan portfolios that meet TMRC’s eligibility requirements.

1.1 Refinancing loans

• Refinancing loans are advanced to banks and financial institutions that have created mortgage portfolios that fully comply with TMRC eligibility criteria.
• The facilities are secured by a debenture over eligible mortgage portfolios, with a minimum required coverage ratio of 111%.
• If the coverage ratio falls below 111%, the borrowing institution is required to provide additional eligible mortgage loans or acceptable alternative collateral, such as Government Securities, to restore the required coverage ratio.
• The maximum tenor is five years, or 60 months, typically on a bullet repayment structure. Renewal is processed at maturity and is subject to the remaining term-to-maturity of the mortgage loans in the refinanced portfolio.

1.2 Mortgage loan eligibility criteria

1. Loans must be fully disbursed and used for the purchase, refinancing, construction, or renovation of a residential building.
2. The mortgage portfolio refinanced by TMRC must provide at least 111% coverage of the TMRC facility at disbursement or renewal.
3. Only first-lien mortgages are accepted.
4. The refinanced mortgage portfolio must have a remaining weighted average life that expires on or after the maturity date of the TMRC facility.
5. Mortgage loans included in the refinanced portfolio must have performed for at least six months before being used for refinancing or replacement.
6. The mortgaged property must be insured against fire up to its full insurable value, with the Primary Mortgage Lender designated as first loss payee.
7. To the best of the Primary Mortgage Lender’s knowledge, the borrower must not be bankrupt, subject to bankruptcy proceedings, or deceased.
8. The loan must be denominated in Tanzanian shillings.
9. The borrower must be a natural person.
10. The mortgage instrument must allow the mortgagee to transfer or assign its rights, interests, and obligations under the mortgage instrument.
11. TMRC may refinance mortgage loans up to TZS 500 million. Loans above this amount may be partially refinanced up to the TZS 500 million limit, provided such loans do not exceed 25% of any refinanced mortgage portfolio.
12. The maximum refinanced mortgage-to-property value is 90%, based on the lower of the purchase price and appraised value. A loan-to-value ratio of 100% may be accepted where additional collateral is provided in the form of fixed deposits, pension benefits or entitlements, collateral replacement indemnity, or Government Securities whose total value is at least 10% of the property value.

1.3 Pre-financing loans

• Pre-financing loans are advanced to banks and financial institutions that have recently launched mortgage products, are in the early stages of providing mortgage loans, or do not yet have sufficient eligible mortgage loans for a refinancing transaction.
• These facilities are secured by Government Securities or acceptable collateral, with a minimum coverage ratio of 100%.
• Borrowing institutions must convert the facility into eligible mortgage loans in line with pre-agreed annual conversion requirements.

Failure to meet pre-agreed annual conversion rates attracts penalties calculated as: amount not applied to eligible mortgage loans at the end of Year n multiplied by the applicable n-year average interbank rate plus a 2% premium.

1.4 Costs and charges

• Interest is subject to TMRC’s cost of funding and the borrower’s membership status.
• Interest is generally serviced quarterly, while principal is paid or renewed at maturity, subject to funding requirements.
• Facility fees are 1.1% of the applied amount for non-member banks. For member banks, the applicable fee depends on the tenor of the loan.

2. Housing Microfinance

Housing Microfinance targets lower- to mid-lower-income beneficiaries by supporting Financial Service Providers that offer accessible and affordable Micro Housing Loan products to Tanzanian households.

2.1 Refinancing loans

• Refinancing loans are advanced to banks and financial institutions that have created portfolios of housing microfinance loans that comply with TMRC eligibility criteria.
• The facilities are secured by a debenture over a Micro Housing Loan portfolio, with a minimum required coverage ratio of 125%.
• If the coverage ratio falls below 125%, the borrowing institution must provide additional eligible loans or acceptable alternative collateral, such as Government Securities, to restore the required coverage ratio.
• The maximum tenor is five years, or 60 months, typically on a bullet repayment structure.

2.2 Housing microfinance eligibility criteria

1. All Micro Housing Loans must be secured by a mortgage, assignment of residential licence or sales contract, certification from a Village Executive Officer or local government authority, pension fund account, group lending arrangement, or other assets approved in advance by TMRC.
2. The outstanding principal balance of Micro Housing Loans in the collateral pool must at all times equal at least 125% of the TMRC loan balance, unless higher or alternative collateral requirements are established following credit review.
3. Proceeds from Micro Housing Loans that have been prepaid in full or in part may be recycled into new eligible Micro Housing Loans, provided all applicable conditions are met.
4. A Micro Housing Loan must be replaced with a new loan of equal or greater value, or prepaid on the next loan payment date, if it becomes past due, the secured property is damaged beyond repair or destroyed, the primary obligor dies or becomes permanently disabled, or the primary obligor or the obligor’s business becomes bankrupt.
5. At least 10% of the portfolio should support women and youth, with youth defined as persons under 35 years, and should finance environmentally safe housing projects, including green housing, cleaner production processes, and energy-saving options.
6. Refinancing must not exceed 25% of the Financial Service Provider’s gross outstanding loan portfolio.
7. The minimum disbursement amount to a Financial Service Provider is TZS 500 million.

2.3 Pre-financing loans

Pre-financing loans under Housing Microfinance may be advanced where eligible Micro Housing Loans represent at least 20% of the disbursed loan amount and the remaining exposure is secured by Government Securities or cash-equivalent assets equal to 100% of the outstanding TMRC loan balance not secured by eligible Micro Housing Loans. The borrower must replace such collateral with eligible Micro Housing Loans within 12 months of disbursement.

Failure to meet pre-agreed annual conversion rates attracts penalties calculated as: amount not applied to eligible Micro Housing Loans at the end of Year n multiplied by the applicable n-year average interbank rate plus a 2% premium.

2.4 Reporting requirements

1. Quarterly unaudited financial statements prepared in accordance with Tanzanian Accounting Standards must be submitted within 30 days after the end of each fiscal quarter.
2. Annual signed audited financial statements must be submitted within 90 days after the end of the fiscal year.
3. Each request for a loan advance must include a collateral report.
4. Beginning from execution of the loan agreement, a monthly deployment report must be submitted detailing enquiries received, applications received, loans approved, loans denied and reasons for denial, and projected funding needs from TMRC for the following 12 months.
5. Within 15 days after the end of each fiscal quarter, a collateral portfolio status report must be submitted, including the information required under the collateral report.

2.5 Costs and charges

• Interest is subject to TMRC’s cost of funding and the weighted average interest rate charged by participating Financial Service Providers to final consumers.
• Interest is generally serviced quarterly, while principal is paid or renewed at maturity, subject to funding requirements.
• Facility fees are 1.1% of the applied amount for non-member banks and financial institutions. For member banks and financial institutions, the fee is 0.825%, excluding VAT.