The term “Mortgage” is a very common word, not only in the world of realtors but also generally. Simply put, a mortgage is a loan provided by a mortgage lender or a bank that enables an individual to purchase a home or any other property.
Mortgages allow you to pay for a house in installments. It is a financing solution that has grown over the years in Nigeria, becoming readily available to people in the country. Overtime, both the federal government and private lenders have pushed the system, describing it as a solution to the shortages in the Nigerian Housing scheme.
Many people in Nigeria have become home owners by using various mortgage options made available both by banks and mortgage lenders. While it’s possible to take out loans to cover the entire cost of a home, it’s more common to secure a loan for about 80% of the home’s value.
While some Nigerian citizens are simply aware of the term, Studies have shown that a valid percentage of Nigerians understand the workings of Mortgages but do not know how to go about getting one. It is therefore expedient to understand how a mortgage works before going ahead to get one. Getting adequate knowledge/understanding about mortgages will not only enable you to make more informed decisions but will also save you embarrassment in the face of your lenders.
This post therefore serves as a guide to getting a mortgage in Nigeria, giving you the most important details you need to have before thinking about getting a mortgage. Here’s a quick guide for you:
Do Your Research
- A mortgage is beyond a short-term commitment, so before going into it, enough research has to be done in order to be equipped with knowledge on the best mortgage exclusively suitable for you. A mortgage is something that demands long-term commitment, so you need make sure you do your research properly in order to get the best results. One very important reason why research needs to be done is to be able to determine the affordability of the mortgage you intend to get. To do this, experts advise that you simply subtract your monthly expenses from your income to see how much you can pay towards a mortgage each month. Some banks also have mortgage calculators on their websites or other platforms for you to check it out.
Save A Deposit
To buy any house, you will need some sort of deposit to put down irrespective of the home you are looking to buy. The amount you need to put down varies from system to system. It can be as little as 5% and as “much” as 50%. This actually depends on the property owners and the finance institutions, so it is necessary to get an idea of requirements for your lender before going all out for your mortgage.
Look For Suitable House Buying Schemes
Nigeria has various schemes that can help you buy a home. For example, the National Housing Fund (NHF) aims to provide better finance solutions to contributors of the scheme. The fund is charged with the objective of mobilizing funds for the provision of affordable residential houses for Nigerians. The NHF scheme is for Nigerians in all sectors of the economy, particularly those within the low and medium income levels who cannot afford commercial housing loans, e.g civil servants, traders, artisans, commercial driers, etc. Any intending beneficiary must be a registered contributor and must be up-to-date with his /her contributions. NHF housing loans are repaid in monthly installments from the income of the beneficiary. This mode of repayment has proven to be both affordable and convenient. One unique feature of the NHF is that the only collateral is the property to secure the loan for. No other collateral is needed for the loan.
Decide On The Property You Want To Buy
After saving a deposit and looking at the various mortgage offerings from banks, the next step would be to look for a home that can be financed through a mortgage. Not every home can be financed through a mortgage so enough research has to be done at this point.
Obtain A Loan
After getting a deposit and recognizing the mortgage loan that best works for you, the final step would be to finalize a mortgage on a property. This final process includes formal talks that will lead to the signing of papers and getting the keys to your new home.
Who Is Eligible For A Mortage In Nigeria?
To be eligible to get a mortgage, you need to be formally employed on a full time and permanent basis. You are also required to have saved a sufficient deposit and not have any bad outstanding loans or history of such.
On the part of the mortgage lender, here are a few things they will look out for:
- Your monthly income
- Your monthly expenditure
- Existing debt profile (if any)
- The value of the property you want financed
- They will also investigate if a mortgage is something you can afford
Finally, once your mortgage has been approved, you can pay find your home and negotiate with the seller. If everything looks acceptable, you can move to close and enjoy your new status as a homeowner.
