Pension

Pension: Your contributions not enough guarantee for mortgage

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Chuks Udo Okonta
Retirement Savings Account (RSA) holders who believed the proposed mortgage finance by the National Pension Commission (PenCom) is a panacea to their quest for befitting homes, should be ready for surprises as an operator has said that just having a contribution is not a guarantee for the mortgage package.
The operator who may not want to be named said the mortgage itself is not a right, thus, RSA holders can’t define where they want their property situated. He stressed that private mortgage institution wouldn’t put their monies where their investments wouldn’t be secured.
“The Institutions giving you credit for mortgage can decide on their terms and conditions. You may have your 25 percent equity contribution and you may not even find a mortgage bank to build a house for you. They don’t have to give you a loan if the risks are not right. It’s the challenges the individuals would face with the mortgage institutions. Having the contribution it’s not a guarantee for mortgage. So it is left for you to convince your PMI on the location of the choice of your property,” he said.
PenCom said in a guideline on Withdrawals from Retirement Savings Account (RSA) Towards Equity Participation for Payment of Residential Mortgage that RSA holders can withdraw between N1.5 million and N50 million from their savings for payment of equity contributions in procuring first-time residential mortgages.

The Commission noted that the tenor of the mortgage loan shall be for a minimum of five year and maximum of 20 years, adding that the interest rate on the mortgage loan shall be at a fixed rate for its whole duration.

“The National Pension Commission (PenCom) is pleased to issue the Draft Guidelines on Withdrawals from RSA for Residential Mortgage. These Guidelines aim to allow contributors to access a portion of their Retirement Savings Accounts, for payment of equity contributions in procuring first-time residential mortgages,” it said.

The draft Guidelines can be downloaded

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