What you need to know!
LKA Cooperative Multipurpose Society Ltd is interested in meeting housing needs of individuals and corporate organizations.
BASIC THINGS TO KNOW ABOUT NATIONAL HOUSING FUNDS (NHF)
Housing, the world over has been identified as a social necessity alongside feeding and clothing. The provision of these amenities is the primary responsibility of the government of any nation at a given period of time.
This pre- supposes that the government, unable to discharge its responsibility in this regard can be said to have failed. As a result of the realization and importance of housing to its teeming population growing at a geometrical progression over the years, successive governments in Nigeria, right from the Military era have at one time or the other tried instituted programmes tailored towards home ownership for virtually all Nigerians.The National Housing Fund That is why today, we have Housing Corporations at Federal and State levels, housing estates constructed by the government, both for outright sale and in some cases for letting to individual at affordable prices. In addition to this, private property development and construction companies
were encouraged to spring up all in a bid for the government to achieve its aspiration of housing for all. Still poised to
meeting the desires of Nigerians, the government realized that given the opportunity, people would house themselves; all the government needed to do was to provide the enabling environment for many people to build, buy or improve the houses they can afford.
The ability of majority of Nigerians to do this on their own is being hindered by:
1. Their relatively low incomes in comparison with house prices.
2. Lack of long term funds required to match the duration of mortgage loans if they have to resort to loans at all.
This further prompted the promulgation of Decree No. 53 establishing the two- tiered structure and introduced private investors into the housing finance industry. Few years later, the National Housing Fund Decree No. 3 of 1992 raised the hope of a vibrant mortgage sector with the establishment of National Housing Fund. The rationale for the establishment of the fund is to enable every Nigerian have access to decent and affordable housing. The policy recognizes the need for substantial funding base devoid of uncertainties of reliance as in the past, on government patronage. The crux is the creation of the two tier institutional structure for the housing finance system and establishment of a mandatory contributory/savings scheme, proceeds of which are to be utilized exclusively for the origination of housing loans at an affordable rate of interest.
The essence is to have a pool of funds from where every Nigerian would have access to tap to realize his dream of becoming a house owner. It is a source of long term funds required to match the normal duration associated with mortgage loans. Thus, it is an avenue to inject low-cost loanable funds into the system on a continuous basis.
WHAT YOU NEED TO KNOW ABOUT NHF
a) WHO CAN APPLY: Any Nigerian above the age of 21 you must be a contributor to the National Housing Funds for a period of not less than six (6) 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.
b) INSTITUTIONAL BORROWERS: Such as real estate developers or construction companies involved in direct housing construction. Hitherto, beneficiaries were
limited to individuals but has recently been extended to this category since either way the goal is to produce mass housing.
c) PURPOSE: The loan shall be for the purpose of building, purchasing or renovating residential accommodation. No loan shall be for refinancing.
d) HOW TO APPLY: 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
e) 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 or letter of allocation if government project, Deed of sublease, Deed of Assignment). The property shall conform to the existing planning laws and regulations (approved building plans). 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.
f) HOW MUCH TO APPLY FOR: An individual borrower is entitled to a maximum amount of N5, 000,000:00 No individual shall be granted a loan in excess of 90% of the cost or value of the property to be mortgaged.
g) OTHER THINGS TO NOTE: The House Ownership Account has to be operated for a specified period. This varies from one PMI to another. Usually it ranges between 6 – 12months. It will afford the PMI the opportunity of having a record of customers’ savings pattern. Repayment figure should not exceed one third (1/3) of total net income on a monthly basis. Except in cases of outright