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Credit: PensionTalk

By Moshood Ayeni

In a recent circular released by PenCom on the approval and immediate implementation of the Guidelines on using part of the RSA balance as Equity contribution for a residential mortgage facility, many questions have been asked on how to go about it.

In this piece, we will walk you through the step by step approach for a successful application by RSA holders who are qualified and interested.

Before we begin, kindly note that this window is not applicable to someone who has less than 3 years to retire or has already retired. Also it is not applicable to those who are yet to contribute for up to 60 months under the CPS.

Let’s get started.

As with every other payment to be made from the RSA balance under the Contributory Pension Scheme (CPS), all RSA holders who opened their RSAs before July 2019 MUST do a data recapture exercise with their PFAs as a compulsory requirement for payment of any kind.

To apply for a part of the RSA as Equity contribution for a residential mortgage, here are the step-by-step procedures to follow:

1. The RSA holder must obtain a property offer letter from the property owner or its agent.

2. Once the offer letter is received, the RSA holder will approach a licensed mortgage lender or mortgage bank for mortgage financing.

3. After doing its due diligence on the offer letter received and if satisfied, the mortgage lender will issue a mortgage offer to the RSA holder whom it intends to finance.

4. The RSA holder will approach his or her PFA to obtain a duly signed RSA statement for the purpose of his or her application for the residential mortgage facility after the Mortgage lender has confirmed the property offer letter presented by the RSA holder.

5. Once the RSA statement is received, the RSA holder will then forward it to the Mortgage lender to confirm if the 25% value is sufficient for the equity contribution of the mortgage facility. Otherwise, the RSA holder will be required to make up the balance before further processing by the mortgage lender.

6. Once the above (5) is sorted, the mortgage lender will then issue a mortgage offer to the RSA holder. This will then be forwarded to the PFA of the RSA holder within 2 working days by the mortgage lender.

7. The RSA holder will approach his or her PFA after 2 working days above to fill out an application form for the payment of his or her 25% balance for the purpose of financing the mortgage facility.

8. Upon receipt of such application, the PFA will review it and compare it with that it has received from the mortgage lender for consistency before further seeking for PenCom approval within 2 working days.

9. PenCom shall within 5 working days review and approve or decline such application and shall communicate to the PFA.

10. Once approval or decline is received, the PFA will then communicate this to the RSA holder within 1 working day. In the case of a decline, the reason will be communicated to the RSA holder who will thereafter make necessary adjustments if required.

11. The PFA will thereafter notify the mortgage lender of the approval and request for confirmation of the property title, confirmation of property readiness, insurance policy and valuation report of the property.

12. If satisfied, along with sending the above request (11), the mortgage lender will also issue a notification of readiness for disbursement to the PFA.

13. Upon receipt of the above (12), the PFA will thereafter instruct the PFC to disburse the amount into the RSA holder’s account with the mortgage lender within 2 working days. The PFC also has 2 working days to disburse the amount so instructed by the PFA.

14. Upon confirmation of receipt of the fund, the mortgage lender will issue a confirmation letter to the PFA within 1 working day.

Married couples are also allowed to jointly pull their RSA balances to fund their residential mortgage facility, provided they meet the stated criteria.

Please note that this opportunity window is opened only once and cannot be taken more than once by any RSA holder. It is open to both regular RSA holders and Micro Pension Plan (MPP) RSA holders in self-employment.

RSA holders are advised to contact their respective PFAs for further clarification and guidance.

To read more on the PenCom circular on Residential Mortgage, click here.

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