Oran Hall | NHT financing for home completion

QUESTION: My partner and I have stumbled upon a house that we would like to acquire, but the unit is only partially done. there are no internal fixtures/fittings. The house is basically a shell.

Jointly, we qualify for a maximum of $11 million at the National Housing Trust (NHT), and the price of the house is $10 million. Is it possible for the NHT to also lend us the one million dollars, being the difference between the $11 million and the $10 million, in order to complete the unit?

- E. Brown

ANSWER: You and your partner should be able to borrow the full sum of $11 million if you can satisfy the NHT that you are able to make the required monthly mortgage payments.

Although both of you may jointly borrow up to $11 million, you should note that the NHT will lend only up to 95 per cent of the market price of the house, so you would only be able to borrow $9.5 million to make the purchase on the open market.

This means you would still have $1.5 million of the maximum sum that you could be eligible to borrow. Subject to your ability to make the monthly payments, the NHT would lend you the $1.50 million as an additional loan for the purpose of home improvement, so you would effectively have two loans.

You should make this application at the time you are making the application for the funds to purchase the house, but the application for the additional funds would not be processed until the other loan has been disbursed and you are in a position to proceed with the additional work on the house. The usual processing time for loans is 90 days.

You should bear in mind that funds will be required to pay the deposit and the closing costs, including stamp duty and attorney's fees.

Before applying for the loan from the NHT, you should ensure that you meet the minimum requirements. To know if you do, you should answer the following questions:

- Are you now contributing to the NHT?

- Have you made at least 52 weekly contributions, 13 of which were made during the last 26 weeks?

- Are you able to account for your contributions and have paid up, with interest, any outstanding contributions due in the last three years?

- Are you between the age of 18 and 65 years?

- Do you earn an income that allows you to repay the loan?

If your answer to all the questions above is yes, you meet the minimum requirements for applying. You should then follow the NHT's loan processing steps: call or visit the NHT to determine if you pass the affordability test, gather all of the documents needed, and take all the documents to the Customer Service Department or the Mortgage Information Department.

At the end of this visit, you should obtain an eligibility letter. Thereafter, do the following:

- Prepare all the required prequalification documents outlined in the loans checklist on the NHT website.

- Contact the NHT to set an appointment for a prequalification interview.

- Attend the prequalification interview, taking with you all the required prequalification documents.

- Issues that need to be discussed or resolved will be addressed. You will then be given a loan interview date.

- Attend the loan interview at the New Loans Department, taking all the documents you are required to present.

At the end of this interview, you should obtain a letter of commitment if the loan has been approved.

The NHT will then process your loan and contact you once processing has been completed. One important action that the NHT will take during this process is registering the loan on the registered title.

Here are some matters you should consider as you contemplate approaching the NHT:

- First, you will be required to verify your contributions at the time of the loan interview in the form of a letter from your present and previous employers.

- Second, it will be necessary to state the specific months and years that you worked with each employer. You should declare only income on which you have paid NHT contributions.

I hope that all goes well.

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