Financial Adviser | NHT loan limits and options

QUESTION: How much could I borrow in order to make a house purchase through the NHT? I am earning $89,000 per month from one institution and $1,200 per hour working four hours per week on the side.

- Sheldon

FINANCIAL ADVISER: If you are a contributor to the National Housing Trust (NHT), its Open Market Loan and Scheme House Loan would seem to be your best options. In the former case, the facility is for buying houses from sellers other than the NHT. The latter is for contributors who buy houses directly from the NHT.

Other facilities include the Build on Own Land Loan, which is for persons who own land or have legal permission to build on a plot of land. All are non-homeowner's loan facilities, which are for persons who do not own their house and have never received a loan from the NHT.

To qualify for a loan from the NHT, you must be a contributor at the time the application is being made; must have made 52 weekly contributions, 13 in the 26 weeks just before the date of application; and must have paid up, with interest, all outstanding contributions due for the last three years.

Applicants should be between the ages of 18 and 65 and should be earning an income that allows them to repay the loan. Your age determines the term of the mortgage, that is, for how long you will be able to borrow the money, and it also has a place in determining how much you can borrow. The rate of interest payable is dependent on your income as you can see from the following salary bands and rates:

• Minimum wage to $12,000.99: 0%

- $12,001 - $20,000.99: 2%

- $20,001 - $30,000.99: 4%

- $30,001 & more: 6%

Your monthly salary converts to a weekly salary of $20,538.46. The income from your part-time employment would only be relevant to your application if you are making NHT contributions from it. The rate applicable to you would be four per cent, but because you have not stated your age, I am not able to say how much you would be able to borrow and what your monthly mortgage payment would be.

This figure would also include the cost of repaying the five per cent service charge that the NHT charges on its mortgages. It covers administrative costs and legal fees. It is added to the loan amount and is included in the mortgage payment, so you would not have to find that amount upfront.

The NHT lends up to 95 per cent of the market value or valuation of the property - whichever is less - to purchase a housing unit on the open market. You would have to find at least five per cent of the cost for the deposit to the vendor.

Ultimately, even if you can source a loan from the NHT, you would need to have the deposit and the difference between what the NHT will lend and the rest of the purchase price. Given the price of houses on the local market, you could be facing a tall order.

If what the NHT is willing to lend you is inadequate, you could engage one of its partners in its Joint Financing Mortgage Programme, but this only makes sense if you can qualify as the ability to pay is a significant factor in determining who succeeds in getting a mortgage loan.

- Oran A. Hall, principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. finviser.jm@gmail.com