What is mortgage finance, and how does it connect to the real estate business in Nigeria? That’s the question in the minds of many who want to know more about mortgages in Nigeria. The word “mortgage” is associated with the real estate sector. In fact, it’s impossible not to hear this word in real estate.
To learn more about the mortgage business in Nigeria, what a mortgage is, how it operates in Nigeria, and how to obtain one, keep reading this article to learn more.
What Is Mortgage?
A mortgage or mortgage loan is an amount of money you receive from a bank to buy a property or build a property. It is a loan specifically for land and house purchase, which is only used to finance the real estate project.
Every mortgage has a specified payment agreement and interest, like regular loans. The borrower also uses the property they are buying as collateral. So, if they don’t pay up, the bank assumes property ownership. The bank or the money’s lender automatically ceases access to the property once the loan has been repaid in full.
Should I Collect a Mortgage To Buy Property In Nigeria?
There’s no specific answer to this question. However, what determines whether or not you have to collect a mortgage to purchase a real estate property in Nigeria includes:
- Your debt management comfortability
- The supposed return you’ll get from the property
- The amount you need for a property
If you are good with debt management and require a loan, you should be okay with collecting a mortgage. If the home/property you buy will yield good returns, then borrowing is not an issue. Consider borrowing if you don’t have enough to purchase the property in cash.
Types Of Mortgages In Nigeria
There are several types of mortgages you can get in Nigeria today. Below are some of them:
- Mortgage For The Employed
This mortgage is only accessible to individuals that institutions or corporate organizations employ. Why? Because the mortgage is for those with a regular source of income that can be connected to the bank they are collecting the mortgage from.
- Mortgage For The Self-Employed
This mortgage is for those that earn an income themselves. Most people in this category don’t earn a static monthly amount.
- Home Re-Finance
This is a mortgage given to a person who has already purchased a property and needs money to fix the property up. It’s not for personal home reconstruction. It’s for the reconstruction of a property that’ll yield returns.
- Real Estate Finance
This is a mortgage loan collected by home developers. They borrow a certain amount to build up a property and start paying back the bank once the building is over and they are making money from the property.
Things Banks Consider Before Giving You A Mortgage
There are things every Nigerian bank will consider before they give you a mortgage for your property. Here are some of them:
- Whether you have a tangible collateral
- What is your repayment capacity is
- How regularly do you get paid
- Your credit history
- Personal details, specific documents, a surety, and finding out about the property you want to develop
When going to a Nigerian bank for a mortgage, it’s important to know the type of mortgage you need and prepare relevant information. Also, note that various banks will have different other requirements. However, before collecting a mortgage, make sure you can repay it.