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PFAs see rising equity payment for mortgage boost homeownership

PFAs see rising equity payment for mortgage boost homeownership

The Pension Fund Administrators of Nigeria (PenOp) says rising allocation to equity contributions for residential mortgages will boost homeownership and real estate development in the country.

They believe that the growth in a number of successful applicants is a demonstration of the substantial commitment of the pension sector to facilitate and stimulate growth in the economy.

Data from the National Pension Commission (PenCom) analysed by the Pension Fund Operators Association of Nigeria(PenOp) shows that during the first quarter of 2023, a total of N341 million from applicants Retirement Savings Account (RSA) balances was allocated towards payment of equity contributions for residential mortgages, benefiting 31 applicants.

Read also: Improving access to mortgage penetration in Nigeria

Moving into the second quarter, this initiative expanded significantly, with N986.88 million distributed among 90 applicants.

Agudah Oguche said the momentum continued to grow in the third quarter, as N7.99 billion was disbursed to 656 applicants. “By the fourth quarter of 2023, the program reached its peak, with a substantial N9.62 billion distributed to 991 applicants. “

These figures Oguche said underscore the substantial impact of directing 25 percent of RSA balances towards residential mortgage equity contributions, demonstrating a substantial commitment to facilitating homeownership and stimulating the real estate sector.

The data further revealed that out of 1,980 workers that applied for funds for residential mortgages since the implementation of the policy to the fourth quarter of 2023, PenCom has approved 1,737. Out of the approved number, 1,174 are federal government employees, 30 state employees and 533 are from the private sector.

PenCom on 23rd September 2022 approved the issuance and immediate implementation of the guidelines on Accessing Retirement Savings Account (RSA) balance towards payment of Equity Contribution for Residential Mortgage.

According to the Commission, the approval is in line with section 89 (2) of the Pension Reform Act 2014 (PRA 2014), which allows RSA holders to use a portion of their RSA balance towards payment of equity for residential mortgages.

PenOp in trying to enhance understanding and public knowledge about the pension mortgage guidelines has answered many of the questions bothering people’s minds.

Who is eligible? Anyone with a Retirement Savings Account (RSA) or Micro Pension Plan (MPP), provided they are in active employment or self-employed.

Number of years to retirement? You can apply as long as you have at least three years to retirement.

Couples can apply: Married couples can apply but have to be individually eligible.

Maximum applicable: The maximum that can be used is 25 percent of the total mandatory RSA balance at the date of application.

Voluntary Contributions: Yes, you can use some or all of the contingent portion of your voluntary contributions to shore up what is needed to make up your equity contribution for your residential mortgage.

Qualifying for a mortgage loan: That is between you and your lender. Your PFA will get involved when you have an offer letter from a property owner and a licensed mortgage lender.