Good day WeyAsk team,
I’m Ugochukwu from Abuja, and I’ve been considering taking up a mortgage for a home I want to invest in. What are the basics I need to know?
Many thanks for your question Ugochukwu. Practically all banks in Nigeria have a mortgage arm with branch outlets all over the country. Some of these mortgage institutions now have the minimum salary obligation for any applicant to be N300,000 per annum as a benchmark to be qualified for the loan facility. It is also possible to get a facility up to N200 million and a minimum facility of around N5million. The basic requirements for accessing a mortgage facility are as follows;
• An application form
• An introduction letter from your employer is needed to ensure that you are indeed an employee of the company.
• Copy of documents of the property you want to purchase
• You are required to present the paychecks or pay slips of the last three months depending on the institution’s policy. This is needed in order to verify that you have a steady income and you can afford to repay the loan you are requesting for.
• Your bank account statement for the last six to twelve months should be presented as well, depending on the requirements of the financier
• A means of identification such as International passport, National ID card, Driver’s license should be presented
• Letter of employment as well as confirmation, and confirmation can be used on jobs from jobs of 2 years or up to 7 years working experience
• Utility bills should be provided
• An approved building plan should be presented
• Domiciliation of the applicant salary accounts with the bank or mortgage institution
However, sometimes, lenders fail to discuss all the available options and implications with borrowers. You need to find out if there are additional fees, as many banks charge this, so it helps to know the total cost of a mortgage before you fully commit. Ask for a list of fees upfront before signing anything.
The interest rate of a mortgage helps determine the total amount a borrower will have to pay back. The lowest interest rates are sometimes usually reserved for credit worthy borrowers with other assets.
It’s also important to inquire as to whether penalties are incurred if a borrower pays off a loan early, or if this in any way changes the dynamics of the loan payment.
And then also you need to know how long it will take to process the loan. It can take anywhere from three weeks to two months or more to process a loan.
All the best with this Ugochukwu. Let us know how it goes.