Section 89 (2) of the Pension Reform Act (PRA) 2014 provides that a Pension Fund Administrator may, subject to guidelines issued by the National Pension Commission (the Commission), apply a percentage of pension fund assets in the retirement savings account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account (RSA).
All applications by RSA holders to access and utilize a percentage of their RSA balances as equity contribution for mortgage loans shall be approved by the Commission.
A RSA holder shall access a portion of the RSA balance as equity contribution for residential mortgage, only once in a lifetime.
An eligible RSA holder shall be allowed to access a maximum of 25% of the RSA balance as equity contribution for a mortgage loan.
An eligible RSA holder shall use the proceeds of the mortgage loan to purchase either a single-family home or an apartment in a multi-unit building, which must be owner-occupied.
The mortgage loan amount shall be a minimum of N1.5Million and a maximum of N50Million.
The tenor of the mortgage loan shall be for a minimum of 5years and a maximum of 20years.
The interest rate on the mortgage loan shall be at a fixed rate for its whole duration.
The RSA holder’s Debt to Income ratio shall not exceed 33.33% of his/her net monthly income at the time of applying for the mortgage. The RSA holder’s debt shall be the sum of the monthly mortgage repayments and other personal debt obligations that impact on his monthly income.
The RSA holder shall be in active employment, either as a salaried employee or self-employed person.
A RSA holder that has utilized a portion of the RSA balance as equity contribution for residential mortgage may not be entitled to a lump sum payment at retirement.