By Dominic AKHIGBE
WED, 5 OCT 2016-Sometimes in the second quarter of 2015, I wrote about two series on the National Housing Fund Scheme. The response from Nigerians was mountainous. I got calls from several contributors to the Scheme from their various places of employment who didn’t know the power the Scheme conferred on them towards Housing Ownership from The Federal Mortgage Bank of Nigeria with a Housing Loan Facility at 6 percent interest per annun with repayment period of up to 25 years. I found out then that a lot of Nigerians had resigned to the helplessness that the scheme was for the political class. In a way; they were right but that was before the Jonathan Administration. If there was one thing that administration got right; it was the repositioning of the Federal Housing Schemes vis-à-vis the rebuilding of confidence in the Contributive scheme called the National Housing Fund; NHF.
However, a few days before today; I was in a function organized by a Major co-operative society registered by one of the populous orthodox churches. I interacted with a lot of people in attendance. It was still evidently clear to me that majority of Nigerians are still not schooled in the act of accessing the Housing option as contributors to the National Housing Scheme. Not even such a close community as a church that has gone through the garmount of challenges of successfully registering a Co-operative Society for the members has been able to help much in this respect. A lot of members saw themselves as brought together by the church for some merriment of some social escapade. I have therefore decided to dedicate the next two episodes or thereabouts of the PropertyLogic to attempt some level of education for our teaming readers who will find this very informative, educative and a call to action. Am starting by throwing more light into the National Housing Fund Scheme from the perspective of the Federal Mortgage Bank of Nigeria, FMBN. I will however lay emphasis on the Formal sector benefit from the NHF this week. Please read on:
The National Housing Fund scheme, (the NHF scheme) is for Nigerians in all sectors of the economy, with very special emphasis on those that fall within the low and medium income brackets that may not be able to conveniently afford commercial housing loans from commercial banks whose interest may be as high as twenty-five percent with repayment period of less than five years in most cases. Those that fall in this category include but not limited to civil servants, traders, artisans, commercial drivers and others. Anybody intending to benefit from the National Housing Fund must be registered contributor and up to date with such contributions. The monthly contribution to the National Housing Fund scheme by contributors is about 2.5 percent of the basic monthly salary.
Now, can the 2.5% of my monthly basic salary or income be sufficient to obtain a loan from the Federal Mortgage Bank to build a house?
The monthly contribution of 2.5% of from my basic salary qualifies you to have access to the loan. The contributed pool of funds created by the contributors all over the nation becomes available to any contributor who wants to borrow from it provided such contributor has contributed for at least SIX MONTHS prior to his Application.
How to obtain the NHF Loan:
An interested contributor who desires a loan from the NHF applies through a registered and duly accredited mortgage loan originator called Primary Mortgage Institution (PMI), The PMI packages and forwards the application to the Federal Mortgage Bank of Nigeria, FMBN for consideration.
Does the monthly contribution determine the loans amount?
The loan amount is determined by the applicant’s affordability. This is the evaluation of the Applicant’s total income level or earning capacity. At this point, a well kept bank account statement becomes very useful. Nigerians without a diligent banking culture loose out here. This is to ensure the benefactor has the ability to repay back. However, it is important to note that almost everyone that earns income can actually afford this loan. What is required is a good income management culture in addition to the loan requirements.
Required documents while applying for the National Housing Fund Loan:
To access the National Housing Funds loan, the following documents are required from the applicant:
- Completed Loan application form.
- Photocopy of land title documents
- Thorough and current valuation report on the proposed house to buy or bills of quantities (BOQ) for the house to build.
- Three years tax clearance certificate.
- Evidence of National Housing Fund scheme participation
- Copy of pay slips for the previous three months (for Employees)
- Equity contribution or personal stake ranging from 10-30% depending on the loan amount applied for.
How is the NHF Loan repaid?
The National Housing Fund housing loans are repaid on a month by month installation basis from the monthly income of the beneficiary. This is a very convenient formula for those that are on monthly payroll. For the business people, its also advisable to develop a savings model ahead of time that will enable them have an amount that can conveniently service the loan on a month to month basis.
Can a contributor obtain NHF loan, if a mortgage loan originator is not in state the contributor lives?
A Contributor who intends to Apply for the NHF loan from his state of resident that does not have a Mortgage loan originator can liaise with a mortgage loan originator; a Private Mortgage Inststitution in a neighboring state or anywhere else in Nigeria to process a loan application. Also, some Primary Mortgage Institutions s are subsidiaries of banks, these banks may operate a Contact Offices for their PMIs in their branches thereby bringing such services closer to the people. In all, distance is not a barer in accessing the National Housing Funds loan.
Where can a Contributor build or buy his house?
An NHF loan benefactor can buy or build his house with the National Housing Fund loan any anywhere as long as it is within the Federal Republic of Nigeria. The applicant must provide acceptable title documents to the land or house to which such loan is used.
As low income earners, how is the collateral for a loan procured?
Unlike other loans from Commercial banks or other specialized banks where collateral are a huge headache; the only collateral for the National Housing Fund loan is the property in acquired with the loan. No other collateral is needed to access the National Housing Fund loan.
Can a benefactor of The National Housing Fund loan access more than once?
The National Housing Fund Loan is accessed once by an applicant. This is strategically so to enable the shame go round every desirous contributor.
Must a benefactor of the NHF Loan buy from government owned estates or can build in his choice place??
The choice is entirely that of the Applicant. He can apply as an individual for National Housing Fund loan to develop a land or buy directly from government estate or private estate developer of his choice.
The maximum amount that can be obtained from the NHF.
The National Housing Fund loan has a sealing of fifteen million naira maximum. The longest duration for repayment is thirty (30) years. The factors to be considered for the amount to be accessed and the highest repayment duration are: affordability, age and working age.
The National Housing Fund Loan Interest Loan annually:
The percentage paid on the interest annually is six percent. This is the lowest in any financial sector. It is done to make the scheme affordable to almost all strata of the society mostly the low income earners.
Does the National Housing Fund loan cover land purchase?
Clearly, the National Housing Fund Loan does not cover land purchase. A prospective applicant that desire to obtain the loan to build a house is must as matters of requirement have a piece of land. Such a land is expected to have acceptable title before he can approach a PMI for the NHF loan.
In the next edition, I will x-ray the National Housing Fund scheme and the informal sector. The NHF loan is for every one that passes the affordability test and not for the formal sector workers alone.
Akhigbe is a consultant in Real Estate & an investment portfolio manager and a seasoned Nigerian Micro, Small & Medium Scale Business Coach. Contact:08034846284