The Nevis Housing and Land Development Corporation (NHLDC), has no control over the interest rates or the terms applied by lending institutions to persons seeking mortgages for houses provided by the Corporation.
This is according to NHLDC General Manager Eustace Nisbett who made the statement in a recent interview; in response to concerns raised by members of the public that mortgages on the affordable homes were too high.
Nisbett explained that different institutions have different rates and this coupled with the fact that some individuals may have pre-existing obligations like hire purchase and loans, could be causing a strain on their monthly finances.
“Some people are just over committing themselves.”
Nisbett further explained: “You will find that some banks offer interest rates of 8.5%. Some may have 9%. Some institutions may have specials where they offer 8%. Some might be as high as 9.5%. It depends on the institution you go to.”
He gave as an example, two persons aged 50 and 30 years respectively each purchasing homes for $128,000. He said because of the age disparity the 50-year-old would have to make higher monthly payments, because he was much closer to the retirement age.
“The bank would look at your current age against your retirement age and make their calculations.”
Nisbett also pointed out that lending institutions usually requires an individual requesting a loan to have some kind of input.
“If you do not have an input you would not have that sort of commitment that is needed. So some persons would easily walk away since they have nothing to lose.”
He explained that some persons may not have planned properly so they are acquiring an asset “without any sort of input and that will always be a challenge for some institutions.”
Nisbett explained that the NHLDC cannot dictate what the bank charges but could assist by lowering its own rates as much as possible thus making the costs applied for its homes are far below the market price for sale and construction.
“…what the corporation has done is to sell a home that is valued $175,000 at $128,000 so you have equity that you could use to do other stuff like furnishing for the house, a car, maybe education for your child or children.”
The NHLDC head also urged persons applying for homes to exercise wisdom:
“If you want a home for $500,000 you cannot expect the corporation to sell you for $100,000 because your salary is $1200 per month.”
He said such a person should apply for something that is more in keeping with his salary.