Sun | Nov 18, 2018

Oran Hall | Checklist for NHT loan qualification

Published:Sunday | October 21, 2018 | 12:00 AM
Good investments in real estate and financial products makes for a happy retirement.

QUESTION:

I am 26 years old. I have been working since October 2012. I was browsing the Internet checking to see if I could get advice and guidance on how to qualify for an NHT loan to own a home in Jamaica when I found an article that you wrote in The Gleaner in 2017. All my NHT contributions are supposed to be paid (I think). I know I will need to check on that, but if they have not been paid, can I pay the back bills to be up to date? I make $60,000 monthly as my base pay is $30,000 biweekly. I can make more from my monthly incentive and the overtime that I do, but I do not want to add that. Is that enough for me to apply for a house loan and get through? I am looking to own my home by the age of 31. Is that possible? I am blank when it comes to the knowledge of being a homeowner or getting pre- qualified and I urgently need your guidance, advice and help. Just tell me the first step that I need to take, down to the last step.

- Bruce

FINANCIAL ADVISER:

To check if your contributions have been remitted to the National Housing Trust, you should go to the compliance department of the NHT with your NIS number, TRN number and a government-issued means of identification. You will not be able to make any payments to cover any contributions that were not remitted by your employer.

The NHT is interested in your weekly salary, but note that your salary is effectively more than $60,000 per month. To know your full salary, multiply the weekly salary of $15,000 by 52 to derive the annual salary. Divide the answer by 12 to derive the average monthly salary. Note that statutory deductions also apply to your additional income.

The NHT advises that you would qualify for a loan of $5 million based on a monthly salary of $60,000 and your age as you would, at age 26, qualify for a loan with a term of 40 years at the rate of 2 per cent. The monthly repayment would be about $19,800 per month. These figures would not apply at age 31. Bear in mind that you would need to have the deposit and funds to take care of the closing costs when you are ready to purchase a house.

I am assuming that you are interested in an open-market loan, whereby the NHT lends contributors money to buy a house being sold on the open market by an individual or agency other than the NHT. This is a loan for persons who do not own a home.

You can borrow as a single applicant, or you may co-apply with one other qualified NHT contributor to access a higher loan limit to purchase a house. If you need - and can afford - to borrow more money, you may seek additional funds from another lending institution that is willing to enter into a joint finance mortgage with the NHT.

Before applying for the loan, you should check if you meet the minimum requirements by answering the following questions. You do if you answer yes to all of them.

n Have you identified the house that you wish to buy?

n Have you agreed on a price with the seller and drawn up a formal sale agreement?

n Is the registered certificate of title for the property available?

n Have you made at least a 5 per cent deposit on the property? Do you earn an income that allows you to repay the loan?

n Are you now contributing to the NHT?

n Have you made at least 52 weekly contributions, 13 of which were made during the last 26 weeks?

n Are you able to account for your contributions and have paid up, with interest, any outstanding contributions due in the last three years?

n Are you between the age of 18 and 65 years?

You should then follow the NHT's loan processing steps:

n Call or visit the NHT to determine if you pass the affordability test.

n Gather all of the documents needed.

n Take all the documents to the Customer Service Department or the Mortgage Information Department.

At the end of this visit, you should obtain an eligibility letter. Thereafter, do the following:

n Prepare all the required pre-qualification documents outlined in the loans checklist on the NHT website.

n Contact the NHT to set an appointment for a pre-qualification interview.

n Attend the pre-qualification interview, taking with you all the required pre-qualification documents. Issues that need to be discussed/resolved will be addressed. You will be contacted within five working days of the pre-qualification interview and given a loan interview date.

n Attend the loan interview at the New Loans Department. You must have at the interview the deposit receipt, sales agreement, a copy of the registered title, the surveyor's identification report and the valuation report.

At the end of this interview, you should obtain a letter of commitment. The NHT will then process your loan and contact you once processing has been completed.

- Oran A. Hall, the principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. finviser.jm@gmail.com