Sun | Jan 21, 2018

Financial Adviser | NHT loan requirements for a landowner

Published:Sunday | August 21, 2016 | 12:00 AM

QUESTION: I would like to know the requirement for the Build-On-Own-Land loan from the National Housing Trust? What if I don't have a land title? How can I obtain this loan?

- Janet


FINANCIAL ADVISER: National Housing Trust [NHT] contributors who own land or have legal permission to build on a plot of land that they do not own are eligible for the Build-On-Own-Land [BOL] loan from the National Housing Trust if they have never received an NHT loan before and are able to meet certain other requirements.

If the cost of constructing your home is more than the funds the NHT can lend you, you would need to use your own funds to cover the difference before accessing the funds from the NHT. You may also borrow additional funds from another financial institution that is willing to enter into a joint finance mortgage with the NHT.

In the event that you are going to build on land you do not own, the legal owner of such land would have to be prepared to be involved in the process in several ways. Ownership of the land would have to be established by the registered title being presented. The owner's TRN and a valid form of identification would also have to be presented. The owner would also be required to sign several documents at some stage of the loan application process.

You should ensure that you meet the minimum requirements before making your application. Apart from owning the land or having permission from the registered owner, your income should be sufficient to allow you to pay the loan. You should be a contributor to the NHT and should have made 52 contributions to the NHT, including 13 in the 26 weeks just before the time of the application. You should also have paid, with interest, any outstanding contributions due in the last three years and be between the ages of 18 and 65.

One critical requirement for borrowing from the NHT is the registered title for the land on which the house is to be built. You see, this is what the NHT will use as security for the loan as it must protect its interest in the event of default. If you do not have a registered title for the land, you will not be able to meet the minimum requirements for getting the loan.

But once satisfied that you meet the minimum requirements, you should contact the NHT office nearest to you for a list of the documents that are required for a loan interview. On being satisfied that you have all the required information and documents, the next step is to make an appointment with the NHT for the loan interview.

If you are successful with the loan interview and there are no issues with the land title, you can expect the first disbursement of funds within three months of the interview.

You do not have to own the land on which you want to build, but there must be a registered title for it if you are to succeed in getting a loan from the National Housing Trust.

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