Mortgage in Nigeria: Home Loan Opportunities For You
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Mortgage in Nigeria: Home Loan Opportunities For You

If you are looking to buy a house in Nigeria, for personal use or investment, you need to find out about taking out a mortgage in Nigeria. In other words, it gives you insight on how to own a house in Nigeria if you do not have money to buy outright.

Of course, buying a landed property in Nigeria may be the largest purchase you’re likely to make; therefore, make sure you know what it takes to get a mortgage in the country.

This article is for references only. To guide you with securing a homeowner’s loan in Nigeria with any of the Central Bank of Nigeria (CBN) approved primary mortgage banks in the country. For faster reading, you may click on any of the heading below to go to the section on this page.



1. What is mortgage in Nigeria?

A mortgage is a loan taken out by a borrower from a lender (usually a financial institution) to purchase a landed property or real estate. It is used by the borrower to raise funds to buy a landed property, or alternatively used by an existing home owner to raise funds for any other purchases.

As a matter of fact, individuals and business entities use mortgage as a financial bridge when buying real estate; that is to say, it is use to purchase landed property without paying the entire value of the purchase up front.

In general, this landed property will act as a collateral for the fund raised. If taking out a loan to buy a home is your choice, feel free to check out available property for sale in Nigeria on our platform.

Therefore, financial institutions responsible for lending out the loan to purchase homes or landed properties are referred to as mortgage banks.

2. Facts about mortgages in Nigeria


Morgage to GDP ration in Nigeria, Fact about Nigeria Mortgage Market, Mortgage Finance in Nigeria
Facts and figures about the Nigeria mortgage market.

The size of mortgage finance in Nigeria compared to the country’s GDP is low. Presently, mortgage finance as a share of Nigeria GDP stood at 0.5% compared to that of other African countries.

Although, the country’s mortgage finance is very low, the size of the mortgage market is growing each year. Presently, the homeowner’s loan market have exceeded ₦550 billion in value; about 85% growth compared to that of 10 years ago.

In Africa, South Africa leads the way, with the country mortgage finance standing at 31% of the country’s GDP.

According to the latest figures gathered from the recently concluded Global Housing Finance Conference, tagged “Housing 2030” from Wold Bank Group, it states and I quote:-

“Mortgage to GDP ratios for emerging market economies with functional secondary markets and mortgage refinance facilities are of significant values with the exception of Nigeria.”

What does this mean?

It clearly indicates that the mortgage financing in other African countries are growing; at the same time, the growth is adding significant value to those country’s economy. Furthermore, Nigeria is an exceptional country when it comes to relating the mortgage finance ration to the country’s GDP.

As can be seen, there are problems of mortgage financing in Nigeria; but, how does this affect you as a Nigerian?

Well……this is dealt with in the last section of this post.



3. Mortgage System in Nigeria: How does it work?

Mortgage System, Mortgage System in Nigeria, How to get a mortgage in Nigeria

There are handful of mortgage lenders in Nigeria that will lend you money to buy a house. These financial institutions do so with interest. That is to say, they charge you a certain percentage on the initial home loan taken out.

Although, the percentage on the interest may change over time; but, it all depend on your agreed terms and conditions with the lender.

Nevertheless, before taking out such mortgage, you need to know the basis relating to home loans in the country. Therefore, let’s take a look at how mortgage system in Nigeria work.

  • Decide on lender to go with:

In Nigeria, there are two types of mortgage lenders you can choose from. You can either go with the National Housing Fund (NHF) scheme. That is to say, NHF is the scheme set up by Federal Government of Nigeria to cater for all Nigerian above the age 21 and in paid employment to have access to low interest home loan.

As a members of the scheme, you contribute 2.5% of your monthly salary to the fund through Federal Mortgage Bank of Nigeria.

While, your other option is to get your home loan from mortgage banks (see list of approve mortgage banks in Nigeria below). In other words, these banks can be referred to as mortgage loan facilitators.

  • Collect home loan application form

In the first place, you need to collect the appropriate housing loan from your chosen lending institution. Fill out the form as accurate as possible.

If you are applying for NHF scheme home loan, you will have to channel your application through any of the CBN approved registered and duly accredited mortgage loan originator; that is to say, any of the Primary Mortgage Banks listed below.

  • Submit necessary documentation

In order to be considered for a mortgage loan, you will need to submit the necessary documentation. Although, each mortgage lender do have their own requirements, all you need to do is to make sure you fulfill those necessary requirements.

For more details the necessary documentation, see how do I apply for mortgage in Nigeria.

  • Get your deposit ready

As soon as your mortgage application is approved, you are ready to go purchase the property. In general, you will only be receive 90% of the cost of the house from NHF; while this may be lower with other lenders (this depend on individual circumstances).

Another key point, the approved mortgage loan will only be paid directly to the sell; in other words, you should also pay the deposit around the same time your loan is paid.

  • Repayment

Repayments will be in accordance to your agreed terms. Nevertheless, you are required to pay a certain amount each month to the mortgage lender until the loan amount is paid off.

The amount you pay each month will be based on the overall mortgage loan taken out calculated over time. That is to say, loan amount multiply by the interest rate, then multiply buy some financial parameter and the years for the mortgage loan.

From time to time, you will need to review your mortgage interest rate with your repayment amount. In effect, you could be saving yourself a considerable amount of money on the long run; in addition, you could also cut down on the years of your repayment.

Another key point to remember, your home finance interest rate is calculated based on the Central Bank of Nigeria (CBN) base rate for the Federal Mortgage Bank.

Hence, each mortgage loan facilitators will now add their own percentage to the base rate (this is their profit)

For more details on how to calculate your home loan repayment, check out Mortgage Calculator resources online.



4. CBN Approved List of Mortgage Banks in Nigeria

Nigeria has large number of financial institutions operating in the country; namely, commercial banks, micro finance banks, insurance companies, Primary Mortgage Banks (PMB) and few others.

A question asked by many individuals is :-

How many mortgage banks are in Nigeria?

Nigeria has 34 approved primary mortgage banks (PMBs) approved by the Central Bank of Nigeria. Hence, these home loan institutions have been accredited to help you facilitate mortgage loans.

Take a look at all the approved list of mortgage banks in Nigeria.

S/N Name Of Mortgage Bank Address Phone Number
1 Abbey Mortgage Bank Plc 23 Karimu Kotun St, Victoria Island, Lagos State.
01 903 5700.
2 AG Homes Savings and Loans Limited 96 Opebi road Ikeja Lagos State. 01 270 4634.
3 Akwa Savings and Loans Limited 13C Ligali Ayorinde Street, Victoria Island, Lagos State. 01 270 5380.
4 ASO Savings and Loans, PLC Construction House, 18 Adeyemo Alakija St, Victoria Island, Lagos State. 0803 281 2924.
5 Brent Mortgage Bank Limited 192a jike oki street, off Ligali Ayorinde Street, Victoria Island, Lagos State. 0803 477 1433.
6 Centage Savings and Loans Limited 13C Ligali Ayorinde Street, Victoria Island, Lagos State. 01 270 5380.
7 City Code Savings And Loans Ltd First Floor, Investment House, 21/25 Broad Street, Lagos State. 01 270 5316.
8 Coop Savings and Loans Limited 11b, university cresent Okediji Avenue, Mokola Hill, Ibadan, Oyo State 0815 839 3948.
9 Delta Building Society Limited 126, Nnebisi Rd, Asaba, Delta State, Asaba, Delta State. 0803 745 7634, 0812 285 9582.
10 FBN Mortgages Limited 76 Awolowo Road, Ikoyi, Lagos State. 0812 743 3340.
11 Federal Housing Authority Homes Savings and Loans Limited 39, Durban Street Off Adetokunbo Ademola Crescent, Wuse II, Abuja. 09 2921100, 09 672 5582.
12 First Generation Mortgage Bank Limited Plot 86, Aminu Kano Crescent, Off Ahmadu Bello Way, Wuse II, Abuja. 09 4611352.

Other Mortgage Banks in Nigeria as Approved by CBN


Approved List of Mortgage Banks in Nigeria, Primary Mortgage Banks in Nigeria, Nigeria Mortgage Banks
Click to expand the list of CBN approved mortgage banks in Nigeria

5. How do I apply for a mortgage in Nigeria?

In Nigeria, more than half of the country’s population are middle-class, therefore, buying a home is not an easy task. As a matter of fact, getting a home loan in the country may be an option for many.

In that case, many will ask the question – How do you apply for a mortgage in Nigeria?

To get a home loan in Nigeria, you have to apply through any of the approved Primary Mortgage Banks (listed below or apply for your home loan through any og the Nigeria commercial banks.

You can apply for a mortgage in Nigeria in three different ways.

To apply for a mortgage loan in Nigeria, here are the banks requirements:

  1. Bank statement of account (12 months or more).
  2. Employment and confirmation letter (if employed).
  3. Certificate of Incorporation of business (if in business).
  4. Three years tax clearance certificate.
  5. Letter of consent to mortgage to your chosen PMB.
  6. Means of identification (National ID Card, International Passport e.t.c).
  7. Utility bills as prove of address.
  8. Application form (provided by mortgage institution).
  9. Original title deed of property (certificate of Occupancy).

      As soon as you are ready with the above documentation, at the same time, you have identify the home financing institution best for you; then, you approach the lender.

      Although, this may not be as straight forward as it sound; as we all know that things in Nigeria may be complicated at time. Nevertheless, you still have to give a shot.

      6. Who can get a mortgage in Nigeria?

      Why do you need a mortgage in Nigeria?

      There are different reasons for individual to apply for home loan. Some will like to take out homeowners loan to buy personal house to live in; while other may need the loan for real estate investment purposes.

      For this reason, there exist CBN approved financial institutions in the country to help you achieve your dreams.

      In that case, who is eligible to get a mortgage in Nigeria?

      Nigerian citizens over the age of 21, in paid employment or has been certified self-employed, can apply for a mortgage in Nigeria. Similarly, foreigners looking to live or do business in Nigeria can also apply for mortgage facilities in the country.

      There are certain conditions attached to getting a mortgage in the country; like being a registered member of the National Housing Fund (NHF) scheme, or you being able to afford the minimum down payment for the home loan.

      In addition, the mortgage lender will access you on your ability to continue making further monthly payments.

      Nevertheless, each home loan financing institutions have there on conditions to be met.

      Please NOTE:

      It is important to realize that your purchased home may be at risk if you do not keep up with your mortgage repayments. By all means, you should make sure you pay the minimum payment required from you to your mortgage lender.

      7. Types of mortgages in Nigeria

      As you finally make up your mind on getting a suitable homeowners loan, you should now make up your mind on the type of mortgage to go for. In a country that has different lenders offering different financial products, it may not be easy for you to make up your mind.

      To begin with, mortgages types in the country differ based on some parameters; namely, interest rate, the repayment structure and duration of the loan. All these parameters are contributing factors that you need to put into consideration when taking out a mortgage loan.

      Nevertheless, this section will take you through all that you need to know; with regards to mortgage types in the country.

      In the event that you want to begin the process of your mortgage loan application, it is important to know the pros and cons of each mortgage type. This will assist you in making an informed decision.

      Therefore, I present to you the three types of mortgages in Nigeria for your consideration.

      i. Fixed Rate Mortgages

      In Nigeria and most countries in the world, a fixed-rate mortgage in the financial world is referred to as a mortgage loan that has a fixed interest rate for the entire term of the loan.

      What does it mean to you as a borrower?

      In a word, it means that you will only be paying the mortgage lender an agreed monthly fee throughout the lifetime of the loan.

      Generally speaking, most Nigerian home-loan lenders will also fixed your monthly repayment date to fall on the date you took out the loan.

      How long is a fixed-rate mortgage for in Nigeria?

      The loan is usually set to run for 10, 15 or 30 years.

      Advantages of Fixed rate mortgage for loan borrower:
      • Loan monthly repayment is predictable.
      • Low risk when interest is rising.
      • Protected against any unforeseen sudden rise of interest rate.
      • Easy to understand; that is to say, a borrower can easily work out the repayment calculation.
      • Little difference in interest rate when comparing different mortgage lenders.
      Disadvantage of Fixed rate mortgage for borrowers:

      The main disadvantage of fixed rate mortgage is that you are more likely not to be approved for a mortgage loan when interest rate is high.

      ii. Variable Rate Mortgages

      Variable rate mortgage is a type of home loan that the interest rate on the loan facility is not at a fixed rate. Rather, the interest payment is liable to changes based; and the changes is normally set above a bench-marked rate.

      For example, if you are offered a home-loan that is 0.75% above the bench-marked rate of 5.0%, you will be paying back and interest rate of 5.75% on your mortgage loan for that period.

      On the other hand, if the bench-marked rate falls to 3.0%, your home loan interest rate will also fall. That is to say, it will become 3.75%. Likewise, if the bench-marked rate increases, let’s say to 10.0%, your mortgage loan interest rate will increase to 10.75%.

      As can be seen, variable rate mortgage are structured is such a way that your repayment includes both the bench-marked rate (sometimes referred to as index rate) and a variable rate margin.

      How is the index rate on a variable rate calculated?

      In general, most Nigeria mortgage lender base their index rate on their own rate. That is to say, the Central Bank of Nigeria (CBN) lending rate and a small percentage above the CBN rate. That additional percentage stands for the lenders profit.

      Another key point, the interest rate on the loan may fluctuate at any time during the life of the loan.

      How long is a variable rate mortgage for in Nigeria?

      Like the fixed-rate type of mortgage, the loan is usually set to run for 10, 15 or 30 years too.

      Advantages of variable rate mortgage for loan borrower:
      • Loan monthly repayment is lower.
      • Interest rate on home loan is low.
      Disadvantages of variable rate mortgage for borrowers:

      The main disadvantage of variable rate mortgage type is that you may likely pay higher interest rate and monthly repayment if the bench-marked interest rate increases. That is to say, you are taking a high risk, and when the government index rate goes up, your mortgage loan interest rate will increase too.

      iii. Interest Only Mortgages

      Interest only mortgage is the type of home loan that the borrower only pay the interest on the loan facility for the agreed period; then, pay back the full balance at the end of the loan.

      In other words, the principal balance will stay the same till the end of the loan period. This principal balance must now be paid in full by the borrower at the end of the loan term.

      In Nigeria, this type of mortgage is sometimes referred to as “Balloon Mortgages” because of the way in which it is structured.

      How long is an interest-only rate mortgage for in Nigeria?

      In like manner, the duration of an interest-only mortgage in Nigeria run for 10, 15 or 30 years.

      Advantages of Interest only mortgage for loan borrower:
      • Monthly payments are low during the term.
      • Borrower can pay more during the term to off-set the loan balance.
      • Cash-in on the property when house price is high.
      • Easy to understand payment method; in a word, you can easily work out your interest payment each month.
      Disadvantage of interest only mortgage for borrowers:

      The main obvious disadvantage of an interest only mortgage is that it can be risky, especially when a borrower find it difficult to pay of the loan balance at the end of the loan term.

      As a result, the borrower will have to forfeit the property.

      8. Problems of mortgage financing in Nigeria with solutions

      There are various underlining problems of mortgage financing in Nigeria that requires long lasting solutions. Although, these problems may not be solved immediately, but with adequate planning; individuals, business entities and government will benefit from it.

      Inasmuch as we are able to evaluate the home loan financing problems, we will have a lasting solution.

      Records indicates that there are shortage of adequate homes; resulting from inadequate housing finance in Nigeria. As a matter of fact, statistic shows that the country is currently faced with 17 million housing unit deficit; that will increase each year by 900,000 if nothing tangible is done.

      Generally speaking, I will break this section into three different parts; that is to say, issues of mortgage financing for individuals, lenders and government. Additionally, it also comes with recommendation.

      To enumerate, here are mortgage financing problems in Nigeria with solution.

      • Individual mortgage financing problems:

      Many of us will like to have a house of our own; but, due to the following reasons, we cannot.

      1. Lack of access to finance.
      2. Property affordability.
      3. Ignorance and illiteracy.
      • Solutions:

      In the light of problems mentioned, my recommended solutions for you are:

      1. Increase your financial literacy.
      2. Source for affordable homes.
      3. Equip yourself with real estate knowledge.
      • Mortgage lenders financing problems:

      In reality, most of the CBN accredited home loan facilitators also have issue they face. By the same token, I will list their issues here too.

      1. Lack of adequate borrower’s data.
      2. Document validation.
      3. Macroeconomics; such as interest rate.

      Solutions:

      1. Source for up-to-date borrower’s information.
      2. Fast track documentation validation.
      3. Be more professional; that is to say, employ competent solution providing processes.
      • Nigeria government: Issues relating to mortgage financing:

      Be that as it may, Nigeria government to do share in this mortgage financing problems. For this reason, let’s take a look at how it concerns the government.

      1. Lack of up-to-date land registry information.
      2. Inadequate information through relevant departments.
      3. Bureaucracy.

      Solutions:

      1. Create system to fast track uploading of landed property documentations and information.
      2. Be more informative; in a word, create awareness relating to home ownership through.
      3. Implement a system whereby administrative procedures will be less complicated.
      4. Create and implement appropriate mortgage policies that will be favourable to all stakeholders.

      All in all, many Nigerians could become home owners if some of these solutions are put in place. Even if you fall into the category of low-income earners, you may seek for financial assistance, from mortgage lenders, to buy apartments and flats in Nigeria.

      Conclusion

      As shown above, many Nigerian citizens have the opportunity to own a house of their own; but, most people can not bother to find out how they can go about it. With the Federal government National Housing Fund (NHF) scheme, you to can become a home owner.

      In Nigeria, individuals are still have one form of reservations or the other when it comes to taking out a mortgage loan; however, over 75% of Nigerians will have the opportunity to own a house with the Nigeria mortgage system.

      Mortgage in Nigeria is taking good shape with the CBN accredited lenders; therefore, I will recommend you work towards getting your own homeowner’s loan from any of the approved list of mortgage banks in Nigeria above.

      Yokebay

      Koye Beckley is an Entrepreneur, SEO specialist and a Trainer. He is the founder of Yokebay.com and has published numerous business related articles that has high ranking position on search engine result pages (SERP). He is passionate about helping business owner grow their online business through search engine optimization (SEO); at the same time, he lives to travel the world.
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