HOW TO GET THE NATIONAL HOUSING FUND LOAN
The National Housing Fund (NHF) is a Federal Government scheme, which entitles all Nigerians above the age of 21years in paid employment to a low interest, government funded loan. Members of the scheme contribute 2.5% of their monthly salary to the fund through Federal Mortgage Bank of Nigeria. The maximum amount obtainable under the NHF used to be N5 million but has since been increased to N15 million. The borrowed capital is repayable over a maximum of 30 years at the rate of 6% interest. Here is a detailed explanation of how you can access the National Housing Fund Loan as a low-income earner and turn your real estate dream to a reality.
Who Can Apply for the Loan?
Any Nigerian above the age of 21. They must be a contributor to the National Housing Funds for a period of not less than six months. For individual borrowers there must be satisfactory evidence of regular flow of income to guarantee loan repayment. This condition is easy to ascertain for applicants in paid/salary employment. For the people in private/trading businesses, there might be need to resort to their bank statements of account.
What is the Purpose of the Loan?
The loan shall be for the purpose of building, purchasing or renovating residential accommodation. No loan shall be for refinancing.
How to Apply for the Loan?
Except for institutional borrowers who can apply for the loan directly from Federal Mortgage Bank of Nigeria (FMBN), individuals can only apply through a duly licensed and accredited Primary Mortgage Institution (PMI) of their choice and not directly to the FMBN. Loan applications are also to be obtained from the same PMI.
What is the Security for the Loan?
The property (residential accommodation) for which the loan is sought shall serve as security for the loan. The property must have valid title documents (C of O; R of O, Deed of Sublease, Deed of Assignment or Letter of Allocation). The property shall conform to the existing planning laws and regulations and building plans approved by the appropriate authorities. The mortgage property must possess sufficient value to recover the loan. The mortgage property must be insured against hazards. Applicant must accept to take up both “Fire Insurance Policy” and “Mortgage Protection Policy”. The loan shall be secured by first legal mortgage between the applicant and the PMI.
How Much Can be applied for?
An individual borrower is entitled to a maximum amount of N15 million. No individual shall be granted a loan in excess of 90% of the cost or value of the property to be mortgaged.
Are there Special Conditions?
Institutional Borrowers Such as real estate developers or construction companies involved in direct housing construction may apply for an NHF loan. Hitherto, beneficiaries were limited to individuals but access has recently been extended to institutional borrowers. Also, the The House Ownership Account has to be operated for a specified period. This varies from one PMI to another. Usually it ranges between 6 – 12 months. It will afford the PMI the opportunity of having a record of applicant’s savings pattern. Repayment figure should not exceed one third (1/3) of total net income on a monthly basis. Except in cases of outright purchase of property, disbursement of the loan is made in instalments and in relation to the stages of development.
Requirements for accessing the National Housing Fund Loan
- Open a savings account with a registered Primary Mortgage Institution (PMI)
- Contribution to the fund for at least six months prior
- Have satisfactory evidence of regular flow of income to guarantee the loan
- Submit photocopies of valid title documents (e.g. C of O)
- Approved survey/site plans
- Approved building plans
- Priced bill of Quantities where applicable
- Valuation report prepared by a firm of registered surveyors and valuers where applicable
- Letter of consent to mortgage to your chosen PMI
- Apply on a prescribed mortgage loan application form
- Offer Letter/Acceptance and Allocation letter (In case of government projects)
- In case of registered self-employed applicant, a copy of Articles and Memorandum of Association and a copy of Certificate of Incorporation as evidence of employment status must be submitted.
Contributing to the NHF requires you to have to register with the Federal Mortgage Bank of Nigeria. According to NHF Act No.3 of 1992 All Nigerians in employment, whether self-employed or in paid employment, are required to contribute 2.5% of their basic salary/income to the National Housing Fund.
The registration procedure is as follows: The Federal Mortgage Bank of Nigeria (FMBN) will supply employer registration form (NHF1) to employers and employers will complete form NHF1 and return to the nearest branch of the Federal Mortgage Bank of Nigeria. Also, the Federal Mortgage Bank of Nigeria will register the employer and issue an employer’s registration number after which the bank will issue form NHF2 to employers for completion by employees or directly to self-employed or individual.
After that an Employee will complete the form NHF2 and return to his or her employer and the employer or self-employed individuals will return completed form NHF2 to Federal Mortgage Bank of Nigeria. The FMBN will then register employees on form NHF2 and allocate employees participation number to each employee/self-employed individual. The FMBN will issue a passbook to each of the registered employees where the monthly deduction of his/her 2.5% basic salary will be posted by the employer.
At this point, an employee is now a registered participant of the National Housing Fund. The employer will commence deduction of contributions at source. Such deductions/contributions are remitted to Federal Mortgage Bank of Nigeria with schedule of payment indicating the amount contributed by each employee and the period covered. Self–employed contributors will also commence monthly remittances of contributions to FMBN.