Financial Adviser | Will NHT finance house deposit?
QUESTION: My husband and I are planning to purchase a house through the National Housing Trust (NHT) for $6.5 million. We are required to make a 10 per cent deposit. Together we can get up to $7 million from them. My problem is, I don't have the cash to make the deposit. Will the NHT finance that? Can you outline the steps I have to go through? Thanks in advance
FINANCIAL ADVISER: It is a frustrating reality in the Jamaican marketplace that there are persons who, on the basis of their income, can service a mortgage but are not able to purchase a house because they do not have the funds required to make the deposit.
This calls for a greater level of planning to generate the necessary savings and investments to finance such an important undertaking.
In your particular case, it seems that you intend to source all of the funds for the proposed purchase through the NHT, which does not have a policy of lending funds for the deposit to its beneficiaries.
Nonetheless, it does offer some assistance as its current policy allows for contributions for the period from 2009 to 2014 and to 2015, in some cases to be used towards the deposit. This is not going to be sufficient to make the deposit.
In the case of First Step Homes or houses being sold by the NHT from any of its schemes, the matter of a deposit is not an issue as no deposit is required once you qualify for the property at the price the NHT is asking. Further, the closing cost is generally less than $10,000. The drawback is that not all applications are successful due to the process of selection used.
You should also note that the NHT may lend up to 95 per cent of the purchase price of the unit or valuation, whichever is less.
It seems that you have already done some preliminary work in regard to securing a mortgage from the NHT, hence your statement mentioning how much you and your husband qualify to borrow. On a general note, individual contributors may borrow up to $4.5 million for older houses and $5.5 million to purchase houses completed since September 1, 2015.
The steps to be followed to apply for an NHT loan are outlined on the website of the NHT http://www.nht.gov.jm. It also has a wealth of information regarding other related matters.
Your first step is to visit or call the NHT to determine if you are deemed to be able to afford the mortgage. Make up your mind about the property you want to purchase. Gather the documents the NHT requires to produce the eligibility letter. The documents are your NIS and TRN cards, payslip for two months, verification of your gross income and contribution letter(s) from present and past employers and a valid form of identification issued by the Government of Jamaica.
You will take them to the Customer Service or Mortgage Information Department of the NHT and receive you eligibility letter. You will then need to prepare the pre-qualification documents that you will need for the pre-qualification interview. They include those I mentioned previously plus others, including proof of the payment of property taxes, proof of age, a copy of the registered title, and a current passport-size photograph. After the pre-qualification interview, if successful, you will attend an interview at the New Loans Department and wait for the response of the NHT.
As you seek to source funds to make the deposit, take a close look at what it will cost you overall to service your debt obligations. Bear in mind that a mortgage, or any loan generally, may prove quite burdensome initially but may get less so over time if your income increases and the loan repayment is fixed. I hope all goes well with you and your husband on the road to home ownership.
- Oran A. Hall, the principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. firstname.lastname@example.org