In a country where home ownership remains a distant dream for many, 20Twenty Financial Services is stepping up to change the narrative with a N$5 billion scheme that reduces the cost of owning a house in terms of interest paid to enable more Namibians to be homeowners and to live debt-free.
The mortgage product offered by 20Twenty is an innovation in the Namibian home loan market, which has subsequently resulted in 31% of the 20Twenty client base consisting of first-time homeowners that could not access housing finance before, Business Express understands.
Beyond this, the product is reducing the total interest cost of ownership by up to 30%, ensuring debt-free home ownership at retirement age by reducing the period of indebtedness, and protecting disposable income against the impact of interest rate movements.
“The 20Twenty product offers more flexibility than a traditional home loan and protects the homeowner’s disposable income against unpredictable interest rate movements and thereby reduces default risk. The loan offered is a variable-term, fixed-affordability loan with the initial installment set at a specific affordability level for the individual between 20% and 25% of gross income. The installment increases annually by the same percentage increase as the individual’s annual salary increase, which is typically in line with inflation. The installment does not change when interest rates change,” the company said recently, adding that a 12-month average CPI rate that adjusts bi-annually forms the basis for both the investor and the homeowner.
“The rate is linked to inflation; therefore, when the salary increase is below inflation in a year, it results in a slight increase in the term of the loan, and likewise, if the increase is above inflation, the term reduces. The offering focusses on people whose employer offers a salary deduction option for 20Twenty to administer salary increases.”
20Twenty Financial Solutions specialises in home loan financing and provides an innovative inflation-linked home loan option that is ESG-focused. This cost-effective solution increases housing accessibility for a broader segment of the Namibian population. The home loan is available to employees of participating employers via a salary deduction.
“The structure is ideal to reduce credit risk for the investor. Funding is channelled to a bankruptcy-remote Special Purpose Vehicle, of which the sole purpose is to originate mortgage-backed home loans. Concentration risks are managed in terms of investors, employers, and the number of clients per SPV.
“As home loans are approved and registered, funds are drawn from the investment capital, filling up target investment tranches between N$75 million and N$250 million per SPV. Each tranche is ring-fenced to a SPV and available as either listed or unlisted. Listed instruments improve tradability and are secured by their underlying asset cluster. The Medium-Term Note Program and Investment Plan state the terms of notes, rights of holders, holds security, and sets procedures in place for note holders,” explains 20Twenty.
The listed instrument complies with the rules of the NSX and qualifies as a local asset in terms of NAMFISA-regulated requirements. Additionally, the underlying mortgage origination business has the highest level of corporate governance in place.
“An investor interested in participating can find 20Twenty as a listed debt instrument on the Namibian Stock Exchange (NSX). Our amortising notes aim to achieve a long-term annual return of Namibian CPI+2%. These notes provide investors with reliable, predictable monthly cash returns,” affirms the company.
Genesis Financial Holdings recently acquired a shareholding in 20Twenty Financial Solutions to support the company’s objective of offering affordable housing finance solutions.
Evangelina Nailenge and Ingah Ekandjo, the proprietors of Genesis Financial Holdings, will also be actively engaged in the company’s daily operations as Executive Directors as part of the agreement.
Consumers are anticipated to benefit from the partnership, which is anticipated to unlock new investment opportunities and reduce the cost of property ownership in Namibia. An announcement regarding an adjacent distribution channel for 20Twenty Financial Solutions is anticipated in the near future.