Owning a Home in Nigeria Through Mortgage

The Nigerian dream of owning a home looks slimmer by the day and these bad attractions could be traced back to political policies, heavy inflation rate, lack of accessibility and terrific interest rate from lenders.

Home ownership in Nigeria is put at 10% according to the Central Bank of Nigeria compared to 72% in the US and 78% in the UK. Due to high cost of construction materials, surge in land prices and excessive financing cost that has made purchasing harder for middle and low income families.

So far, mortgage is largely applied for by real estate developers, investors due to large funds it provides and the long-term repayment structures it affords. While everyone can’t be a real estate developer, here is what you need to know about mortgages in Nigeria.


What is a mortgage ?

A mortgage (sum of money) is the transfer of ownership of a property (home) by a borrower (home-owner) as a security to a lender (Mortgage Bank) upon an agreement, express or implied condition that the property (home) will be re-transferred to the borrower (home-owner) upon the repayment of the mortgage. 

Some requirements checked to get a mortgage in Nigeria include

  • Your monthly income
  • Your monthly expenditure 
  • Your existing debt profile  
  • The value of the property you want financed
  • Investigate if a mortgage is something you can afford

Getting mortgage loans is achievable with high performing rates in cities like Lagos and Abuja but you might face some difficulties.

Here is a process on getting mortgage facilities. 

  1. Save a deposit: 

When you are planning to buy a home, you will need to make a deposit. A certain percentage required by the property owners and the financing institution involved in giving the loan.

2. Look for house buying schemes:

The national housing fund is specifically designed to provide financing solutions to contributors of the scheme. (See more details about the scheme below)

3. Ability to repay loan:

The financing institution needs to know you can pay your loan over a long period of time as many mortgages are not short term commitments. Looking at your current income, subtract your monthly expenses and see how much you can drop solely for mortgage every month. 

ASO saving Loan Amortization Calculator

4. Start looking at properties:

Not all homes are necessarily sold or can be bought with a mortgage hence why you need to look out for properties readily available and can be purchased with mortgage facilities.

Property For Sale in Lekki 

5. Obtain a mortgage loan:

You have a property that can be bought with a mortgage, you have made your deposit, and can prove to your financier that you can commit to a long term payment  contract. 

Proceed to signing an agreement and go get your property

There are over 30 qualified mortgage banks accredited by the central bank of Nigeria disbursing NHF loans and performing advisory services.

  1. Abbey Building Society
  2. Aso Saving & Loans
  3. Brent Mortgage Bank
  4. Fha Mortgage Bank
  5. Lagos Building & Investment Company
  6. Mutual Alliance Saving & Loans
  7. New Prudential Building Society
  8. Nigeria Police Mortgage Bank
  9. Trustbond Mortgage Bank
  10. United Mortgage

The National Housing Fund 

NHF (National Housing Fund) is a scheme created by the Federal Government for Nigerian workers, to help them access flexible financing to get their own homes and is administered by the Federal Mortgage Bank of Nigeria (FMBN). 

With NHF, Nigerians can access a single-digit low interest-housing loan and utilise it for the purchase, construction, renovation or expansion of their residential buildings. It is a statutory contribution that stipulates that all Nigerians earning the minimum national wage and above, should contribute 2.5% of their basic monthly salary to the fund.

Documents required to apply for an NHF loan include

  1. a) Completed application form
  2. b) Photocopy of title documents
  3. c) Current valuation report on the proposed house to buy
  4. d) 3 years tax clearance certificate
  5. e) Evidence of NHF participation (Minimum of 6 months)
  6. f) Copy of payslips for the previous 3 months
  7. g) Equity contribution

What is the mode of repayment?

NHF loans are repaid on a monthly basis from the monthly salaries/income of beneficiaries.

Sources: Propertypro.ng

Compare listings