A mortgage is a loan taken out to buy a building or land. The loan is ‘secured’ against the value of your home until it’s paid off. If you can’t keep up your repayments, the lender can repossess (take back) your home and sell it, to recoup their money.
Individuals and businesses use mortgages to make large real estate purchases without having to pay the entire purchase price upfront. Over a long period of time, the borrower repays the principal, plus interest, until she or he owns the property free and clear.
There are over 30 mortgage banks in Nigeria, among whom are First Trust Mortgage Bank Plc, Mutual Alliance Savings & Loans, Haggai Mortgage Bank Ltd, Federal Housing Authority (FHA) Mortgage Bank, Lagos Building Investment Company Plc, etc., where anyone who meets the requirements can access a mortgage. The apex body enabling the operations of mortgage banks in Nigeria is the Central Bank of Nigeria.
The National Housing Fund (NHF) administered by the Federal Mortgage Bank of Nigeria is one of the most common government schemes to address Nigeria’s housing finance issues. As long as you are eligible for it, the NHF is a good option to consider.
Getting access to these loans is much easier in big cities like Lagos and Abuja than in other locations due to documentation and title considerations. The house to be bought should be verified with proper documentation before a bank loan can be availed.
Benefits of Using A Mortgage
The first and most obvious reason for using a mortgage is that it allows you to buy a house without having to save the entire amount needed to purchase the home. This means homes that would be out of your reach normally are available to you!
Secondly, having a mortgage can help you seem more trustworthy in the banks’ eyes and thus strengthen/increase your Credit Rating. If you have a mortgage with consistent, on-time payments, then you are considered trustworthy. Therefore, if you are ever thinking of getting a loan for a car or a business venture, the chances are higher that you will get one!
Thirdly, there’s equity. As you own your home and make payments, your home will accumulate equity. If you buy a home that requires a down payment and the home appreciates yearly, you will be making profits already on your investment. When you finally have your home paid off, you will have a precious asset in your possession. You can either sell your home, put it up for rent, or retain it as your private residential home; it is entirely up to you.
Who can get a mortgage in Nigeria?
You may be eligible for a mortgage if you are formally employed on a full-time and permanent basis. You can also be eligible if you are a business owner with a clear track record of high turnover. You are also required to have saved a sufficient deposit and not have any bad or outstanding loans or history.
Most mortgage lenders will also carry out checks which include but not limited to:
- Your monthly income
- Your monthly expenditure
- Your existing debt profile
- The value of the property you want to be financed