The new Regulations which are made under section 38 of the Social Security Act, Cap 135 came into force on 8th March 2024.
The main objective of the new Regulations is to allow and enable members of social security funds to use the funds available in their social security accounts/funds as collateral for mortgages for residential properties.
The portion available to a member as a collateral for the home mortgage can only be an amount not exceeding fifty percent (50%) of the benefit entitled to an eligible member at the time of the application; or the purchase price of the property which shall not exceed the market value of the property, whichever is less. The funds available for mortgage are accessible to only eligible Tanzanian members who are members of social security funds.
Financial institutions which wish to utilize the use of this kind of collateral will have to adhere to the requirements by submitting the requisite compliance documents to the Division responsible for social security within the Ministry responsible for social security matters and enter into an agreement with the said Division. This means that this option of mortgage collateral may not be available in every financial institution but only to such institutions which wish to opt for it.
Any member who has contributed to more than one Fund, is allowed to use the combined total funds available in all funds to which she or he is a member.