Kingston, Jamaica, 15 January 2017 — The National Housing Trust’s mortgage products remain the most accessible route to homeownership for the majority of Jamaica’s formal workforce, but the practical complexity of navigating the Trust’s loan options, eligibility requirements, and co-applicant arrangements continues to catch many first-time buyers by surprise.
For contributors who have never owned a home and have never received an NHT loan, three core facilities are typically available: the Open Market Loan, for purchasing a property from a seller other than the NHT; the Scheme House Loan, for buying directly from the NHT; and the Build on Own Land Loan, for contributors who own land and want to construct their own home. All three are non-homeowner’s loan facilities and carry specific eligibility criteria that determine both whether a buyer qualifies and how much they can borrow.
Qualifying to Borrow
To qualify, a contributor must be currently active at the time of application, must have made at least 52 weekly contributions, including 13 in the 26 weeks immediately prior to applying, and must have paid all outstanding contributions due for the preceding three years. These requirements exist to ensure that the NHT’s loan book is supported by active contributors rather than those who have drifted out of the system, but they can create real difficulties for workers whose employment has been intermittent, who have changed jobs, or whose contributions have been deducted by employers but not forwarded to the Trust.
The NHT lends up to 95 per cent of the assessed market value or valuation of the property, whichever is lower. That means the buyer must still provide a deposit, as well as cover the gap between the maximum the NHT will lend and the actual purchase price if the property costs more than the loan ceiling. In a market where even modestly priced homes often exceed the NHT’s individual loan limits, that gap is frequently bridged through co-applicant arrangements or top-up financing from commercial banks through the Joint Financing Mortgage Programme.
The Affordability Gap
The central challenge for NHT borrowers in 2017, as in previous years, is that the loan limits, while set at levels intended to reach the affordable segment of the market, often fall short of the prices at which properties are actually available. The disconnect between what the NHT will lend and what homes cost in desirable areas has been a persistent feature of Jamaica’s housing market for over a decade, driving up the proportion of buyers who must combine NHT and commercial bank financing to complete a purchase.
For Jamaica’s mortgage market to function effectively at the affordable end, either property prices must be contained through increased supply, or loan limits must keep pace with price growth, or both. The NHT’s periodic adjustments to its loan ceilings represent attempts to address the second of those conditions, but without a matching supply-side response, the effect is partly absorbed by further price increases rather than by expanded access for buyers.
Follow Jamaica Homes on Youtube @jamaicahomes and Instagram @jamaica_homes and on Facebook @jamaicahomesnews Send us a message or email us at onlinefeedback@jamaica-homes.com or editor@jamaica-homes.com
Visit our YouTube Community ↗