Mortgage: House financing option for Nigerian workers
Are you a Worker in Nigeria?
Do you earn steady income?
Have you been contributing to the National Housing Fund?
Are you a Landlord or still a tenant?
Do you have plans to build or buy your own house soon?
If you answered yes to any of the above questions, then what I will be discussing in this blog is definitely for you. So, keep reading!
You will agree with me that not everyone can afford the resources to buy a house at once, as a result of this, many rule out or keep postponing the idea of becoming homeowners. The unfortunate thing here is that, some don’t know they can buy or build a house through mortgage.
let’s further understand what mortgage is all about and how to use it to realize your dream of becoming a home-owner.
What is a Mortgage?
A mortgage is simply a type of loan given by a bank or mortgage lender to individuals or group to enable them build or buy houses. Access to mortgage facility goes a long way to assist many who cannot do outright purchase to buy or build their own houses. The house usually serves as collateral for the money borrowed, which is usually repaid on a long-term repayment arrangement.
Types of Mortgages
It is necessary to understand the various types of mortgage available
Below are types of mortgages
- Fixed Rate Mortgage
- Variable Rate Mortgage
- Balloon Mortgage
Fixed Rate Mortgage
This is the type of mortgage that the interest does not change but remains the same throughout the entire life of the loan. In a fixed rate loan, the interest rate is set at the date you take out your loan and remains the same throughout the term of your loan, irrespective of whether there is a rise or fall in bank interest rates.
The good part of fixed rate mortgage is that, it is predictable, this is good because it enables the debtor plan his or her budget. This is obviously, the most popular mortgage.
Variable Rate Mortgage
Variable rate mortgage also called Adjustable Rate Mortgage (ARM) gives the lender the opportunity to adjust the interest rate on the mortgage from time to time in accordance with the agreed index stated at the beginning of the loan by both parties.
In this type of mortgage, interest rates can either go up or down depending on change in interest rates. This means that your repayment can go up or down when using this type of mortgage.
This is a type mortgage that requires the borrower to pay back in lump sum. Balloon mortgages are typically issued with a short-term duration. Balloon mortgages may be interest free, or they may require interest-only installment payment.
Balloon mortgage can make use of fixed or variable interest rate and it is the least popular mortgage type.
Before deciding to go for a mortgage plan, it is essential you know the necessary things it entails in order to avoid bottleneck during the process.
Things to Consider Before going for a House Mortgage
As exciting as obtaining a mortgage plan can be, it is important you perform some key evaluation.
Below are important points to consider, before going for a mortgage.
Is my Income stable?
This question can never be over emphasized. Mortgage plans usually entails steady payment over a given period of time. Having a stable income will ensure that you meet up with the agreed repayment plan.
Your income stability will also help you know if you are fit for certain type of house and mortgage plan, and help the lender know which particular mortgage plan that is fit for you. Nobody wants to encounter a bottle neck here.
Can my income meet up with the mortgage plan?
Your income can be stable but not sufficient for all mortgage plans. So, you ought to consider whether your stable finance can meet up repaying back the loan for the house within a desired period of time.
Irrespective of the mortgage plan you choose, also bear I mind that there will be other responsibilities that would require money. Of course, other things will require funding; that is why it is not advisable to put oneself under undue financial pressure.
How long can you remain on a mortgage plan?
Time is of essence in any project one is embarking, so the duration of mortgage should be put into consideration. How many years do you think you can cope, paying back the loan?
With all the points discussed above, the next question is how can you access a suitable mortgage plan in Nigeria?
House ownership made easier with National Housing Fund
Most civil servants think it is mission impossible to own a home in the country, most especially low and middle leveled workers. Corporate workers who also contribute to the National Housing Fund can also access funds from the housing scheme.
These funds can go a long way to help the worker make equity payment, for the property that is up for mortgage buying.
Things you need to know about National Housing Fund
National Housing Fund (NHF) was established by the NHF Act of 1992 to mobilize funds that will facilitate the provision of affordable housing for Nigerians. Under the extant NHF law, every Nigerian earning N3,000 or more per annum is required to contribute 2.5 percent of their monthly basic salary to the NHF.
The funds mobilized will be made available to contributors at affordable interest rates to build homes.
Eligibility to Accessing the loan
In order to be eligible for the National Housing Fund loan, a contributor interested in obtaining NHF loan must apply through a registered and accredited mortgage loan originator or Primary Mortgage Bank (PMB), who packages and forwards the application to The Federal Mortgage Bank of Nigeria (FMBN).
Applicants are required to provide satisfactory evidence of regular income. Monthly deducted contributions must be remitted to FMBN promptly, and at least 6 months contributions should have been made.
Requirements for National Housing Fund (NHF) Loan Scheme
In order to benefit from the fund, below are the requirement:
- Account relationship with a registered Primary Mortgage Bank
- Be a contributor to the fund for at least six months.
- Have satisfactory evidence of regular flow of income to guarantee the loan.
- Apply on a prescribed mortgage loan application form.
- Submit photocopies of valid title documents (Certificate of Occupancy).
- Approved survey/site plans.
- Approved building plans.
- Letter of consent to primary mortgage bank.
- Priced bill of Quantities where applicable.
- Valuation report prepared by a firm of registered surveyors and valuers where applicable.
- Offer letter / Acceptance and Allocation letter (In case of Governments projects).
- In case of registered self-employed, he/she must submit a copy of Articles and Memorandum of Association, and a copy of Articles and Memorandum of Association, and a copy of Certificate of Incorporation evidencing his/her employment status.
List of Approved Primary Mortgage Banks in Nigeria
- Abbey Mortgage Bank
- Ag Homes
- Akwa Savings
- Aso Savings & Loans
- Brent (Skyfield) Savings
- Centage Savings & Loans
- City Code
- Coop Savings & Loans
- Delta Mortgage Finance
- FBN Mortgages
- FHA Homes Ltd.
- First Generation Homes
- Gateway Savings
- Global Trust
- Haggai Mortgage Bank
- Home-Base Mortgage
- Imperial Homes
- Infinity Trust
- Jigawa Savings & Loans
- Jubilee-Life Mortgage Bank
- Kebbi State Homes
- Lagos Building & Investment
- Mayfresh Mortgage Bank
- Mutual Alliance
- New Prudential
- Nigeria Police Mortgage Bank
- Omoluabi (Livingspring)
- Platinum Mortgage Bank
- Refuge Homes
- Resort Savings & Loans
- Safetrust Savings & Loans
- STB Building Society
- Trustbond Mortgage Bank
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