AD­VI­SORY COL­UMN: Mak­ing ad­di­tional con­tri­bu­tions to NHT

Jamaica Gleaner - - BUSINESS - – Jo­vanni Oran A. Hall, prin­ci­pal au­thor of ‘The Hand­book of Per­sonal Fi­nan­cial Plan­ning’. Of­fers per­sonal fi­nan­cial plan­ning advice and coun­sel. fin­viser.jm@gmail.com

QUES­TION: I am a 20-yearold who is earn­ing roughly $45,000 after taxes, and I am very in­ter­ested in own­ing my own house by age 22. I am not sat­is­fied, how­ever, with just the amount contributed to NHT out of my salary. I was won­der­ing if I could set up an ac­count di­rectly with NHT and pay, for ex­am­ple, $10,000 monthly sep­a­rately from the con­tri­bu­tions that are au­to­mat­i­cally de­ducted from my salary. If that is pos­si­ble, would my chances of get­ting a loan from NHT to pur­chase a house in a year’s time be fea­si­ble, and what range of money would I be get­ting – still un­der $4.5 mil­lion or over? FI­NAN­CIAL AD­VISER: I find it in­ter­est­ing that there is so much in­ter­est in bor­row­ing from the Na­tional Hous­ing Trust (NHT) for home own­er­ship based on the ques­tions I have been re­ceiv­ing from read­ers and from young peo­ple, in par­tic­u­lar.

The NHT does not ac­com­mo­date what you are ask­ing about, but it al­lows con­trib­u­tors who are em­ployed by other per­sons and who also earn ad­di­tional in­come from self-em­ploy­ment to con­trib­ute on the ad­di­tional in­come they earn.

It seems that you will only be able to in­crease your NHT con­tri­bu­tions by se­cur­ing a high­er­pay­ing job or en­gag­ing in some self-em­ploy­ment ac­tiv­ity. But it is not only the dol­lar value of your con­tri­bu­tions that qual­i­fies you for a loan.

To qual­ify, you should be a con­trib­u­tor to the NHT and should have made 52 con­tri­bu­tions to the NHT, in­clud­ing 13 in the 26 weeks just be­fore the time of the ap­pli­ca­tion. You should also have paid, with in­ter­est, any out­stand­ing con­tri­bu­tions due in the last three years and be be­tween the ages of 18 and 65.

How much ap­pli­cants qual­ify for is a func­tion of their abil­ity to re­pay, which it­self is a func­tion of their in­come. It is, there­fore, not au­to­matic that ap­pli­cants will qual­ify for the $4.5 mil­lion that you men­tioned. You could qual­ify for much less if your in­come is small.

It is com­mend­able that you have set your­self a solid goal in that you have set a time by which you ex­pect to own your own home. There are some con­sid­er­a­tions that you should take into ac­count, though. You should con­sider whether you can re­al­is­ti­cally own your home by the time you have set.

You should also de­ter­mine the type of house you want to own and in what lo­ca­tion as th­ese do have a very strong bear­ing on the cost. If the NHT loan is all you are con­sid­er­ing for pur­chas­ing the house, con­sider whether it is suf­fi­cient to make the pur­chase.

Bear in mind also the ex­penses as­so­ci­ated with the trans­ac­tion. Th­ese clos­ing costs can be quite high. For­tu­nately, the NHT does not re­quire that th­ese ser­vice charges, as the NHT calls them, are paid up front as they ef­fec­tively roll them into the monthly mort­gage pay­ments.

Al­though each delay makes the ful­fil­ment of this dream more costly, I sug­gest that you do not be­come dis­heart­ened but look closely at which of the NHT op­tions suits you best: build-on-own-land, open mar­ket loan, or NHT scheme house.

I

PER­SONAL FI­NAN­CIAL AD­VI­SOR

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