Your NHT Benefits Explained

by Feb 12, 2020Financial Research, Mortgage & Home Purchase

Intro

What are the Benefits being Offered by the NHT?

Are you thinking about buying a home but have no idea what the benefits of using the NHT are or perhaps you are making NHT contributions and don’t know why or how you can get them refunded? I spoke about a few of the benefits in my article here:  http://financialcentsibility.com/your-nht-benefit-make-it-work-for-you/ but there are so many benefits that I think it would be good to summarize them in one place.

The NHT benefits are generally for first-time home owners[1]. If your name is on another property (even if your parents placed you on as a child) you may not be able to access the home loan benefit, so please confirm anything that I have written here with them before proceeding to access a home loan. (I do not work with or for the NHT – this information is from my own research).

So here are the top ten (10) benefits of using the NHT:

1. Lowest interest rate on the market.

The NHT has rates as low as 0% for certain income groups. The highest interest rate is 5%, which is still lower than rate available in the mortgage market. At the time of writing the average mortgage rate according to the Bank of Jamaica is about 8.15% for the market[2].

A policy change was announced by the Prime Minister in his Contribution to the Budget Debate March 2019 announcing an increase the loan limit from $5.5Million to $6.5 Million. The interest rate was also lowered from 6% to 5% for persons at the higher income levels and by 1% across all income levels. See the table in the image below, extracted from the Budget Debate that summarizes the changes in the interest rate for NHT borrowers.

2. 0% Mortgage

If you are disabled, a new mortgager over 55 years and contributing for more than 10 years, or a public sector worker earning less than $120,000 a month then you can qualify to borrow at a rate of 0%! In general if you earn less than $60,000 a month, then you can also qualify for a zero-interest mortgage. The loan amount that you qualify would likely be lower than the maximum of $5.5, but the amount you qualify for is subject to verification of income and affordability calculations.

See table below for interest rates by income category.

Source:  https://www-2.nht.gov.jm/loans/affordability

3. Refund of your Contributions

If you have been making contributions for more than seven years, or made at least one contribution (i.e. money was deducted from your salary and paid over to the NHT 7+ years ago) then you can actually apply to the NHT for a refund. I recently completed this process and even got some interest on the refund for 2012 at the rate of 1.8% interest per annum).

Visit their website on How to Apply and then scroll to the bottom to start your refund application.

The NHT also has a Special Contributions refund programme, which in special circumstances allows you to be able to claim your NHT benefits sooner than 7 years. The following persons would be able to apply for early refunds:

  • Retirees
  • Invalidity Pensioners – persons who can no longer work because of mental or physical disability
  • Migrating Expatriates
  • Agents of Deceased Contributors

 

4. Loans to build not just to buy!

If you already own the land, then you can access up to $6.5M for construction as well. You can also use the funds to purchase land only. Again this is for first time home owners.

5. Disability benefits

If you are disabled, you can get an early refund of your contributions (you don’t have to wait seven years) and you can access a loan at 0% interest.

 

6. 100% Financing for Scheme Units or Serviced Lots

 In his Throne Speech on February 11, 2020, the Governor General indicated that the NHT plans to do over 10,000 housing starts in the fiscal year 2020/2021[3] and more than 23,000 by 2023. Housing starts have grown by almost 500% over the last 4 years which means many more Jamaicans will have access to homes which they can get 100% financing for. The NHT will lend the full cost for the homes which they build or to persons who wish to purchase a Serviced Lot[4].

Source: https://twitter.com/NestaJA/status/1220478092352933889?s=20 Retrieved on January 23

To see a list of NHT houses under construction, click here, but here is a table I downloaded from their website in 2019.

7. $2.5 Million Housing Grant (Free Money!)

For persons earning less than $15k a week ($60k a month), the NHT has a special $2.5 M Home Grant that can be combined with the NHT benefit when applying for a loan to purchase land or property or to build. A grant is free money and who doesn’t like that! Again, this is for 1st time home owners.

8. $5 Million House Repair Loan 

Once 15 years have passed since you accessed your NHT benefit and you wish to borrow from the NHT to renovate or expand your property, you can borrow an additional $2.5 Million to do so! You can even use it to purchase items like Solar Panels and Storm Shutters.

If you are a public sector employee, you don’t have to wait for 15 years as they offer the benefit after just 10 years.

9. Inter-generational Mortgages

It was announced in 2019 that the NHT will be offering inter-generational mortgages. The model has been adopted in the United Kingdom as explained in an article by The Mortgage Broker. In 2019, the UK saw inter-generational mortgages expanding by 40%. Up until the time of writing, no word has been issued on when this is anticipated to be rolled out or how to apply etc in Jamaica.

The inter-generational mortgage will allow a child or younger sibling to continue with a mortgage obligation, subject to affordability, when the older mortgager retires or dies.

 Under this programme it is contemplated that:

  • The loan will be scheduled over a 60-year period.
  • The beneficiary’s loan with the NHT will be scheduled to retirement and will include the portion of the costs to be covered during the period from the date of the loan to retirement e.g. if the beneficiary has 20 years to retirement, only 20/60 or 1/3 of the cost of the solution will be factored into the required payment;
  • An heir must be identified at the time of application, but options are available for persons who cannot identify an heir including converting to a lease, paying off remaining balance, scheduling for 10 additional years or forfeiture.

10. Access your benefits from yard or from abroad

If you have migrated to another country, if you earn a cash income (i.e. your employer does not pay taxes on your behalf) or if you are self-employed, you can still make contributions to the NHT by sending your payment directly to them through the tax office or even paying online with a credit card. See the instructions here on how to make voluntary contributions.

Just as if your payments were being salary deducted, you are entitled to a NHT refund after seven years.

You can still access your home loan benefit to build or construct in Jamaica but it is important to note that if you are overseas, to access a home loan you have to be contributing for 1 year, but wait an additional 1 year to apply for the loan. Local voluntary contributors have to be doing so for just one year. See this Gleaner Article on Contributions Of The Self-Employed To NHT

 

I hope that helps in your home ownership journey and visit my NHT Mortgage Calculator here for additional support!

 

 

 

 

Footnotes:

[1] With the exception of the Fifteen (15) Plus Loan and the Home Improvement Loan – https://www-2.nht.gov.jm/current-loan-limits-updated-may-2019

[2] http://boj.org.jm/uploads/pdf/credit_conditions/credit_conditions_january_march2019.pdf

[3] https://buzz-caribbean.com/article/govt-to-rev-up-housing-construction-in-new-fiscal-year/

[4] Serviced Lots are defined as having: Potable water-water that is safe enough for drinking and food preparation. Septic/sewer services-city connected sewers or a septic field. Access-a driveway, as rough or refined as it is. Hydro-connected to power.

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