Financial Adviser | Borrowing from NHT to pay for labour
QUESTION: I am seeking your advice. I recently bought a piece of land, for which I have the title and all. I will start working in the private sector soon with a take-home salary of $160,000 monthly, which means that within the next 13 months, I will be able to qualify for an NHT loan. Would I be able to borrow, say, $1.5 million from the NHT to pay the workmen since I would have saved from my own income to buy the materials to build? Therefore, I would not need the whole $4.5 million loan from the NHT.
FINANCIAL ADVISER: I have been advised by the National Housing Trust that they do not usually lend to pay just for labour, but you can write to the manager of the branch of the NHT in the parish where you reside seeking permission to make the request you have outlined to me.
To qualify for an NHT benefit, you would need to contribute for at least one year and be up-to-date, meaning that you would need to make 13 weekly contributions in the period immediately before the time of application.
From what you have mentioned, you propose to build on your own land. The maximum sum the NHT will lend is
$5.5 million, but how much you qualify for is a function of your age, income and payback period. Loans are repayable up to age 70. From the information you have shared about your expected income, the applicable rate would be six per cent per annum.
The NHT advises that persons desiring to build on land other than their own would need to provide written permission from the owner as well as a completed Declaration of Guarantor form.
If you are going to use the approach you are proposing, I suggest you establish very clearly that you will have adequate funds to undertake the construction you have in mind.
The process of securing the loan is as follows. You would first go to the nearest NHT office with your NIS card, TRN card, a valid identification card, your last three monthly payslips, or any amount equalling three months if you are not paid monthly, and a job letter stating your income and the your number of contributions. Satisfactory conclusion of this pre-qualification process should result in you being given an eligibility letter.
You will also be given a checklist outlining what documents you will need for the loan interview. You will get an interview date once you return the documents. The long list of documents on the checklist is available on the website of the NHT - www.nht.gov.jm.
A three-month processing period follows the interview to address issues such as registering the mortgage. Do not expect disbursement of the funds in one tranche. A project officer will be assigned to walk you through the process of disbursement.
I hope your plans come to fruition.
- Oran A. Hall, the principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. Email firstname.lastname@example.org