Mon | Sep 26, 2022

Oran Hall | More on the NHT 15-Plus loan

Published:Sunday | August 1, 2021 | 1:31 AM

QUESTION: I was reading your article that mentioned the NHT Fifteen Plus Loan. As a public-sector employee who seeks to acquire a new house (previous house to be sold as a result of divorce), will I be entitled to the full loan amount available to single applicants?

– Deneise

FINANCIAL ADVISER: The National Housing Trust’s (NHT) Fifteen Plus Loan is for contributors who received an NHT loan at least 15 years ago and now desire to purchase or construct a residential property or do home improvement. Public-sector employees, though, may qualify after 10 years.

In the case of home acquisition, the loan cannot be used to purchase an NHT Scheme benefit, such as a house or serviced lot, which is a lot with basic infrastructure such as paved roads, water supply and electricity.

Applicants must be able to establish that they do not own a residential property and that they did not lose their previous property because of a default on their mortgage payments.

If all goes as planned, you will not own a residential property in a little while, a situation to be brought about other than by a default on mortgage payments, from what you have indicated.

For home-improvement purposes, the funds may be used to complete work on the housing unit, for example, for tiling, but may not be used for external enhancements of the property, such as fencing.

Contributors may borrow as single individuals but may also join with another qualified NHT contributor in order to access a higher loan amount. They may also, as part of the arrangement, borrow from another financial institution that partners with the NHT in its Joint Finance Mortgage facility.

The maximum sum available to each contributor under this arrangement is $2.5 million and the loan is granted subject to the ability of the borrower to pay. So the income of the borrower is a significant factor in determining whether one qualifies for the loan, as is the case with the other loans that the NHT grants.

Public-sector employees benefit from a lower interest rate as they pay 1% less than the rate that applies to others who fall in the same income band as themselves.

So, you would be eligible for the same loan amount as single applicants. I figure you may be referring to people who are neither divorced nor married. If that is what you are thinking, I am not aware of the NHT making a distinction between the marital status of its clients when considering them for benefits.

One thing you can be certain of is that it generally applies the same criteria for determining how people qualify, and requires all applicants to follow the same process.

You should, as a first step, ensure that you satisfy its minimum qualification requirements in relation to income, for example, as this is what is used to determine if you can afford the mortgage.

Without question, you should be a current contributor of the NHT, having made at least 52 weekly contributions, 13 in the last 26 weeks prior to making the application.

The NHT also requires applicants to have already identified the unit they want to buy, have a formal sales agreement with the seller, have agreed a price, and have made a deposit of at least 5.0 per cent of the purchase price.

The Fifteen Plus Loan gives contributors like yourself another opportunity at home ownership but the amount of money it makes available for this is less than the sum it normally makes available per applicant for acquiring residential properties - $2.5 million compared to $6.5 million, subject to affordability.

If you need to borrow additional funds, remember to shop around very carefully to get the best rates. Small differences add up over time and can make a very meaningful difference. It would also be a good idea to have a reserve fund in the event that there is any unforeseen interruption in your income flows in the future.

I hope you succeed in purchasing a suitable house using your NHT Fifteen Plus Loan benefit, the resources which should flow to you upon the sale of your current house and whatever other funds you may need to borrow, if there is a shortfall. All the best.

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