DOWN PAYMENTS
While in other parts of the world banks would loan the full amount, local banks do not finance the entire purchase price of a home. The percentage that they are willing to finance varies from bank to bank. Some will finance up to 85 percent, others only 40 percent. The loan amount is always based on a professional valuation of the property, which may differ from the asking price. If the appraisal values an apartment at $130,000 and the purchase price is $150,000 (or the other way round), the loan is based on a percentage of the lower of the two figures. Even agreement on valuation may not solve all problems. If the developer requires a down payment of 30 percent and the maximum bank loan is 60 percent, the difference must be made up elsewhere before the deal can be finalized.

REPAYMENT PERIODS
Repayments may be spread over 30 years. It is as much in the bank's interest as it is in that of the homebuyer to agree on a package that the purchaser can afford. The amount borrowed is usually fixed so that repayments do not constitute more than one-third of the borrower's income. Charges other than interest vary from bank to bank, although what is saved in one area may be lost in another (see table).

INTEREST
The largest added cost of a home loan is by far the interest incurred. With most banks, the rate fluctuates sometimes according to world rates (such as LIBOR - London InterBank Offered Rate - or US Prime Rate), with a fixed percentage added. With both marker rates currently very low, the figures quoted locally are usually stated not only as a certain percentage above one or the other international benchmark rate, but also as a minimum. The rate could fluctuate also according to local rates, such as Treasury Bills or Beirut Reference Rate. Rates are usually reviewed once a year. Some banks adopt a promotional rate for a specified period at the beginning when buyers' expenses are at their highest.

FILE FEES AND COMMISSIONS
Some banks impose a fixed filing fee in the range of $100-$250, while others charge 0.2 percent to one percent of the amount of the loan, with a minimum that varies between $100 and $1,000, depending on the size of the loan. Banks usually ask for filing fees to be paid before the loan is granted. Banks charge a commission varying from 0.1 percent to one percent, applied either on the loan or on the outstanding portion of the loan.

FISCAL STAMPS
Payments through fixed schedules do not incur stamp fees. When repayment takes place through notes, stamp fees amount to 0.15 percent of the value of each note (i.e., the stamp cost on a $1,000 note is $1.5).

PROFESSIONAL VALUATION
A property valuation expert puts a price on the home so the bank has an independent estimate of what it is worth. Although this entails yet another fee for homebuyers, it allows both the buyer and lender to know if the purchasing price is a fair one. These flat fees fall in the $100 to $250 range. This charge is paid before the loan is finalized.

INSURANCE REQUIREMENTS
Both life and property insurance are required when taking out a housing loan. Coverage is set either at the value of the house or it exceeds the loan by a factor determined by the bank's policy, sometimes up to 130 percent. All banks insist on insurance against fire and some require insurance against natural disasters and a few against war. Third-party liability insurance, covering visitors who are injured in incidents connected with the home, for example, is also demanded by some lenders. All banks demand coverage against death and total permanent disability. Borrowers pay all insurance premiums. Even when the level of house insurance is based on the amount of the loan, the coverage does not decrease as the loan is paid off. The possibility of total destruction of a property necessitates full coverage all the time.

MORTGAGE FEES
Mortgage fees are government charges for registering the loan, giving the bank legal rights to prevent the sale of the house until the mortgage is fully repaid. The fees are calculated at two percent of the mortgaged amount, including fiscal stamps. The total for a $150,000 loan mortgaged at 120 percent would be $3,600. But a house that costs less than $120,000 with more than 7 years repayment period is exempted from mortgage fees only, registration fees are paid, while loans taken through the PCH (Iskan) are exempted from mortgage and registration fees.

HOUSE REQUIREMENTS
Banks want to see a copy of the purchase contract to confirm that a sale exists. They do not hand over the loan amount to the borrower, but pay it to the seller upon the legal completion of the deal. Banks also hold the property deeds until the loan is repaid. Regarding loans for renovation, the money is made available to the borrower in a separate account but banks generally require proof that the money is being spent for its intended purpose.

LATE-PAYMENT PENALTIES
Late-payment penalties range from between two percent and twenty percent per month of the installment calculated daily, sometimes with a minimum penalty. Paying off lump sums of the loan may not save much money. Repaying 'a few' notes sometimes saves nothing at all. What constitutes 'a few notes' is a matter for negotiation between the borrower and lender. Even if the whole balance is repaid early, banks deduct from the settlement figure an amount equivalent to only a part of the interest.

WHAT DO I NEED TO APPLY?
A borrower must have a steady job and a salary that justifies the amount of the loan. Applicants need to provide a copy of their ID, a detailed salary statement, length of employment, type of work, net salary, and a declaration of all financial commitments. Salary and job details need to be confirmed by the employer on company stationery. Some banks will include a proportion of the spouse's earnings to determine whether the household income is high enough to justify a loan. The lenders will almost certainly require domiciliation of salary. Some lenders may require a guarantor.