How to Access Mortgage Loan from the National Housing Fund
The National Housing Fund (NHF) scheme was established by Act 3 of 1992, which entitles all Nigerians above the age of 21 years, especially those in low and medium income levels who cannot afford commercial housing loans, such as civil servants, traders, artisans and commercial drivers, etc., to own houses. The maximum amount obtainable under the NHF is 15 million and the borrowed capital is repayable over a maximum of 30 years at a 6 percent interest rate.
What qualifies you for the scheme?
Any intending beneficiary must be a registered contributor (2.5 percent of monthly salary) to National Housing Fund through the Federal Mortgage Bank of Nigeria, for not less than 6 months.
And 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 NHF?
The fund is created to provide low income workers in Nigeria with affordable houses, by building, purchasing and renovating residential accommodation. It also provides incentives for the capital market to invest in property development. And the provision of long term loan to mortgage institutions to in-turn lend to contributors of the fund.
What is Value of the Loan?
The maximum amount that can be borrowed is N15 million and the loan will be 90% of the cost or value of the property to be mortgaged. Interest on loans is fixed throughout the life of the mortgage at 6 percent per annum, plus a refund of 2 percent interest on retirement.
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 mortgaged 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 do you access the Loan?
If you are a contributor to the NHF loan and you are interested in obtaining the loan. You must apply through a registered and duly accredited mortgage loan originator like a Primary Mortgage Bank (PMB), who packages and forwards the application to the Federal Mortgage Bank of Nigeria (FMBN). Applicants are required to provide satisfactory evidence of regular income. Deducted monthly contributions must be remitted to FMBN promptly, and at least 6 months contributions should be made.
The following Documents are required to process NHF loan:
1) Completed application form.
2) Photocopy of title documents.
3) Current valuation report on the proposed house to buy or bills of quantities (BOQ) for the house to build and.
4) Three years tax clearance certificate.
5) Evidence of NHF participation plus Copy of pay slips for the previous three months
6) Equity contribution or personal stake of 30 percent, 20 percent or 10 percent depending on the loan amount applied for.
NHF loan cannot be used to purchase piece of land to build a house. A prospective applicant who wishes to obtain a loan to build a house is expected to have his/her land as well as an acceptance title to the land prior to the application for NHF loan. Contributors can apply as an individual for NHF loan to develop a land or buy directly from government consort estate or private estate developer. A contributor can only obtain NHF loan facility once in a life time.
The only collateral needed for NHF loan is the property in question. No other collateral is required to secure the loan.