Oran Hall | Buying a home on the market with NHT financing

QUESTION: I am a contributor to the National Housing Trust (NHT) and have never received a benefit and am keen to own my own home but prefer to buy one on the open market even if I have to do some repairs after acquiring it. Also, since I work in the Corporate Area, my preference is for one in that area for the convenience. I prefer the Open Market Loan because only a few NHT schemes are developed in the Corporate Area, so the chance of buying a unit in any such scheme is low. How do I go about getting a loan to buy a house?

– Allison

FINANCIAL ADVISER: As a contributor to the NHT who has never received a benefit, you would be in line for a Non Home Owner’s Loan but would have to meet some other requirements, including being able to pay the mortgage, to be able to get the mortgage to fund the purchase.

First of all, you would need to identify the housing unit in the Corporate Area where you have indicated that you would prefer to live. Recognising that the NHT lends a qualified individual up to $6.5 million and two qualified individuals applying jointly up to $13 million, you should have an idea of where you could identify such a house. What you are able to purchase ultimately depends on how much money you have, in addition to the NHT funds, to make the purchase.

Considering that through the Open Market Loan facility the NHT lends up to 95 per cent of the lesser of the purchase price and the market value of the housing unit, you would need to be able to fund the remaining 5.0 per cent from your own resources or your resources and the joint applicant if you choose that option. Additionally, you should be able to fund the closing costs, expenses such as legal fees that are associated with the transaction.

I do not recommend that you commit yourself to another financial obligation to cover the deposit or the other expenses as you could put yourself into a very difficult financial situation.

Once you have determined what you can afford, you can begin your search, but you should also satisfy yourself that you meet the requirements for getting a loan from the NHT before applying. For example, you should be current with your NHT contributions, having made at least 52 weekly contributions, 13 being made in the 26 weeks just before making the application.

You should also be earning at a level that allows you to make your monthly mortgage payments. The mortgage calculator on the NHT’s website – www.nht.gov.jm/mortgage-calculators – can help you to make that determination.

The NHT would also want to know that you have agreed a price with the seller, that a formal sales agreement has been drafted, that you have made the 5.0 per cent deposit, and that a registered certificate of title for the property is available.

Once you have met these minimum requirements, you should make contact with the NHT to determine the documents needed for the loan interview and make an appointment for the interview. Alternatively, you could check the NHT’s website for the checklist of the documents required.

You could also submit the documents required for the interview by email to loanprocessing@nht.gov.jm before making the appointment for the interview. If the interview goes well, the loan officer will process the loan and guide you as to the next steps.

If the NHT funds and yours are not enough to finance the purchase, you may choose to use the Joint Financing Mortgage Programme facility through a financial institution that partners with the NHT in offering this facility - if you are able to make the required monthly mortgage payment. You can access it directly through any of the participating institutions.

In the meantime, if an opportunity comes to purchase an NHT scheme housing unit within your reach, I suggest you apply. The NHT provides 100 per cent financing for those units subject to affordability. I note that some are mentioned on the website of the NHT for completion in the Corporate Area in 2021 and 2023. Watch the newspapers for invitations to apply, and follow the NHT website for news on such schemes.

I hope you realise your house-owning goal in due course.

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