Oran Hall | Tapping the NHT for additional financing
QUESTION: I have seen where you have given sound advice to many persons. I would like you to assist me likewise. In 2010, I partnered with my brother to acquire a property. I work with the government so I got the loan at a reduced rate. However, it was a decision that I regret because I am only contributing towards a house. I live in the country and have to be paying rent and mortgage. I am in the process of acquiring a lot for myself. Is it possible to get a new loan from the National Housing Trust to help with the building of my house? Thanks for your advice.
FINANCIAL ADVISER: The National Housing Trust (NHT) has a 'Replacement of Co-applicant' facility from which you could benefit, but this can only be done once for an eligible contributor.
To be able to get this benefit, you would need to find an eligible contributor to replace you. That person would assume responsibility for the sum that you owe to the NHT. This would make you eligible for the full benefit for which you would qualify from the NHT, such as $5.5 million for a Build-On-Own-Land loan.
In your case, since you are planning to purchase land to build on, you would be able to apply for a Build-On-Own-Land loan. You and your brother would have to individually write to the branch manager of the NHT in your parish stating that you both agree to the specified person replacing you. Include in the letter what your intentions are. Each letter should be witnessed by a justice of
Thereafter, the NHT will give its conditional approval so that the application process can begin and, at that point, you can ask all the questions you may wish to ask to be clear about how the process works.
This facility can also be used to buy a house on the open market. In this case and in the case of the Build-On-Own-Land loan, any of the owners or beneficiaries can be replaced. Generally, the person who replaces another beneficiary effectively has received a benefit.
If the house previously purchased was an NHT scheme house, the main applicant would not be eligible for this facility, the reason being that selection for NHT scheme houses is based on the number of points earned by the main applicant.
To qualify for an NHT benefit, individuals must:
- be currently contributing to the NHT;
- have made at least 52 weekly contributions of which 13 must have been made in the last 26 weeks just before the date of their application, but, overseas voluntary contributors must have paid 104 weeks or two years of contributions, of which 52 weeks or one year must be paid in the period leading up to the date of application;
- have paid up, with interest, any outstanding contributions due, except for voluntary contributors;
- be between the ages of 18 and 65; and
- be earning an income which allows them to repay the loan.
There is another way in which eligible contributors can access NHT benefits more than once although it would not apply in this case. Eligible contributors can benefit from the Fifteen-Plus Loan facility if they had received a loan from the NHT at least 15 years previously and wish to repair the property that they bought at the time or some other house that they now own and occupy, or if they no longer own a home and are seeking a second opportunity at home ownership. An applicant may borrow up to $2.5 million through this facility.
If you can meet all the requirements of the NHT, it is likely they will accommodate you. But, considering the challenge you are now having, there is no guarantee your sibling will be willing to accommodate you or to accept a contributor who is willing to participate if you succeed in identifying such a person.
If you are able to get it done, bear in mind that you will not be able to access the Replacement of Co-applicant facility again.
- Oran A. Hall, principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and email@example.com