Mortgage Loans in Nigeria; Requirements and How to Get Home Finance

Read the step-by-step guide and the requirements need to get the Mortgage finance loans in Nigeria. Mortgage finance is a service rendered to enable and facilitate easy home ownership in Nigeria. One of the major requirements of anyone to live a fulfilled life is housing.

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Due to the income inequalities prevalent  the economy,individuals who desire homes who don’t have the total cash requirements can still go ahead and obtain mortgage loans in all mortgage institutions all over the country. Virtually all banks in the country now have their mortgage arms, with branches spread all over the country.

Home ownership through mortgage finance is not that difficult as it used to be. It is simple as most of the mortgage institutions now have the minimum salary requirement for any applicant to be N300,000 per annum or around N28,000 monthly being the benchmark for eligibility of the facility.

Before I go deep into the intricacies,mortgage financing involves the customer contributing an amount of the desired property. The bank then offsets the balance on the behalf of the customer, then starts making monthly deductions from the account of the applicant domiciled with the bank or institution.

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I would like to inform that before you go ahead to take a mortgage loan, make sure it is one you can afford by using the online home mortgage calculator (e.g www.mortgagecalculator.Com). You can then input the required figures such as interest rate, total value, loan tenor.

The loan calculator will help you determine the monthly payment to be deducted monthly from your account.This will in turn help you go for a facility not beyond your income.Some of the features of a mortgage loan you will find in major finance institutions includes the following:

(1) You can get a facility of up to N200million

(2) The interest is not fixed,usually ranges from between 15% -25%  in Nigeria.What is advisable in this case is for any applicant to make enquiries from 2 or more institutions,compare interest rates before settling for any mortgage institution.Different mortgage institutions in Nigeria charge different interest rates.

(3) Down payment is between 10% to up to 30%.

(4) Maximum loan tenor period now reaches up to 20 years in Nigerian mortgage institutions.

(5) The minimum loan amount is around N5million .

(6) you can access equity release of up to 80% of the market value of the property in some instances.

(7) The portion of the income deductible monthly fondly called the debt burden ratio (DBR) is usually about a quarter or 25% of monthly income.This means a person earning say N100,000 will be giving up around N25000 monthly from his pay.

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Depending on the way the finance is structured,loan repayment can be on equal monthly basis (EMI). Here, an equal sum is payable throughout the entire lifespan of the facility which is made known in an amortization table.A substitute to this is the reducing balance basis (RBB).

Here, repayment is made heavy at first or in the early stages of the lifespan of the loan but reduces drastically to smaller amounts as the lifespan of the loan lapses. The requirements to be obtained for a loan from any finance institution are:

(1) An application form

(2) means of identification such as international passport,Drivers license,National identity card etc

(3) Domiciliation of the applicants salary with the bank/mortgage institution.

(4)statement of accounts.12 months or more depending on the institutions policy.

(5) Letter of introduction from employer

(6) Letter or employment & confirmation. Confirmation can be used for jobs under 2 years or up to 7 years work experience.

(7) Utility bills

(8) Approved building plan

(9) Copy of title deed to the property

(10) original payslips or salary stubs .from 6 months or more depending on requirement as prescribed by financier.

Some fees might be required upon commencement such as perfection fees and some fees will be borne by the applicant during the life cycle of the loan such as processing fees ranging around 0.25%. Any facility to be granted always follows 3 basic stages:

(I) Assessment

(II) Processing and approval

(III) Perfection.

Mortgage financing is largely successful for residential developed properties, than undeveloped ones.Lets now give a vivid picture of how the whole process operates.

Mr A sees a property he likes costing N15million for his family or himself. He wants to buy the property but does not have the cash backing to effect total sum payment. He also works in company XYZ where he earns N140,000 after tax and all other deductions.

All he has to do is walk into any mortgage financial institution who will assist him in purchasing the house.From the requirements listed above,once he can put down 10% or N1.5million down payment.

The bank will balance the N13.5million and help him purchase the house of his choice.The bank then structures repayment at the prevailing interest rate they offer (ranging between 15%-25%), deductible monthly over a period of time as agreed by both parties.

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A lot of people in Nigeria still shy away from this practice of using mortgage institutions to purchase homes due to  beliefs such as hatred of debt of any kind, procrastination or I will build when I have the total cash required, seeing mortgage finance institutions as only being profit driven and not customer oriented.

This has in turn caused a proliferation of uncompleted houses, in every nook and cranny of the country today. Most of the uncompleted houses came to be after costs rose beyond what was budgeted by the owners without any form of financing from mortgage institutions.

Some even end up paying wrong parties, building on land under legal tussle or owned by government but still sold by unscrupulous individuals.

Mortgage institutions during their verification and assessment will found out whether the buyer can go ahead with the purchase or inform when in doubt of the genuineness of the property being purchased.

Mortgage finance institutions in Nigeria have come to stay. They are largely underutilized by Nigerians who have no understanding of their services or the way they operate.

They were recapitalized many years back to enable more and more Nigerians own their own homes for people without the total financial muscle to do such and are performing this service continuously.

I urge anyone who is currently employed, self employed who doesn’t have their own home but desires to do so to take a walk into any of the mortgage institutions branches we have in the country today.

Anyone who follows all the steps as highlighted in this piece will find the process relatively easy and worth it. Contact me through the contact us page for anyone who has questions or issues with getting mortgage finance from any institution or needs further aid in going about the the process.

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In conclusion, mortgage finance will take away all the bottlenecks involved in the buying and building process and help you purchase that desired home you have always dreamed of as seen on newspapers,television adverts and the likes. Don’t delay in taking that step to own your dream home.

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