Financial Adviser | What it takes to afford a NHT house by 35

QUESTION: I am interested in purchasing a house from the National Housing Trust (NHT). My weekly wages are $12,240 before tax, and sometimes I do overtime, which will take it up to $19,380, or,$17,340 for the week. I am now at the age of 31 and want my home before age 35. I do not really want to partner with anyone.

Stephaney

FINANCIAL ADVISER:

I understand you to be saying that you would like to buy one of the National Housing Trust scheme houses. It is possible for you to make such a purchase at your level of income, but you should not expect to buy a fully completed house, and your success in buying a unit may rest on where you live or work relative to where available units are located.

The information I have been able to source from the NHT is that you should be able to borrow $3,215,683 from it based on your age and your weekly salary of $12,240. If you work for the Government, the interest rate would be three per cent and the monthly payment would be $17,653.88. If you work in the private sector, the interest rate would be four per cent and monthly payment $19,584.72. The term of the loan would be 39 years based on your current age of 31.

The figure of $12,240, being your regular income, would be the basis on which the calculations would be made, but you should note that you would also have to be making NHT contributions on that sum.

STARTER HOMES

The NHT currently has units in three schemes for sale, but applications will close before you see this column. I am making reference to them to illustrate the type of benefit low-income earners can expect from the NHT.

All three schemes are located in St Catherine, and priority will be given to qualified applicants who live or work in the parish, although all qualified NHT contributors may apply. Generally, the NHT advertises its schemes on its website or in the media.

The units are 348 square feet in size and the land space ranges from 3,600 square feet to 4,000 square feet. The units are described as First Step Homes,or starter units, and include a bedroom, a kitchenette, a veranda and a bathroom, but there is space for expansion.

The units in the schemes I referred to above are at three price levels: $2,700,000, $2,900,000, and $3,500,000. The NHT will only lend up to the full cost of the respective

units initially but will lend the difference between the $3,215,683 and the cost of the unit where applicable at the time the unit is to be extended. In all three cases, the closing cost is $3,500.

Generally, though, the NHT would lend up to $4,500,000, so the additional amount for a borrower who qualifies for that sum would be the difference between that figure and the price of the above units. In your particular case, the $4,500 would not apply as your salary would be deemed to be insufficient to service the mortgage.

Individuals who are currently contributing to the NHT and who have made at least 52 weekly contributions, 13 of which must have been made during the 26-week period leading up to the date of application, are eligible for loans to buy scheme units.

You must apply using the application form on the NHT's website. If you are without Internet access, you may apply at any NHT office. Once you fill out and submit the online application form, you will receive a reference number, which you should write down for future reference.

You will need your NIS number and your TRN, as well as information about where and when you were employed in order to apply. You must fill in the specific month(s) and year(s) that you worked with each employer, for example, January 1998 to December 2004 - XYZ Ltd.

Keep your eyes open for scheme units that the NHT may have for sale and for which you may qualify.

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