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Property Lagos

Getting a HOME MORTGAGE IN NIGERIA

What To Do Before You Apply For a Home Mortgage

A home mortgage is a loan given by a mortgage company or bank and/or other financial institutions for the purchase of a residential property. Usually, home mortgage will either have a fixed or floating interest rate, as well as a lifespan of 3 to 30 years.

 

In a nutshell, mortgages are used by individuals & businesses to make huge real estate purchases without making one-off payment. Over a specified number of years, the borrower repays the housing loan, plus interest, until whole payment is cleared.

 

In today’s article, we will highlight all you need to do before you proceed to apply for a Home Mortgage.

What To Do Before You Apply For a Home Mortgage

RESEARCH WHERE YOU CAN AFFORD

Research the area you want to live in. Look into the local shops and restaurants, your commute to work, and travelling distance to family. Try to estimate your affordability.

Create a list of ‘must haves’ and potential compromises. Decide how many years you want to pay for. It could be cheaper per month to spread repayments over a longer period, but you will end up in debt for longer and paying more interest in the long run.

 

READ THE TERMS VERY CAREFULLY

The lending institution most likely has a legal document containing terms of the housing loan. Importantly, read the terms carefully and make certain to fully understand the terms before securing a loan. Is the interest rate killing?

In fact, try to see if you can possibly get a better interest offer elsewhere? If you have trouble understanding the contents of the fine print, get legal assistance from your lawyer.

 

Also Read: Top 7 Features of a Profitable Residential Rental Property

 

Save Enough Money

In Addition, you will need to make some deposit to put down on any home you are looking to buy. The initial deposit varies. It can be as little as 5% to over 50%. The deposit is dependent on the property owners and the financing institutions, so you would do well to ask around some of these mortgage banks to get an idea of requirements. This is because the lower your mortgage is, the less likely your property is to fall into negative equity. This is where the value of your property falls below the amount you owe on the mortgage. The lender will feel more comfortable that they’ll receive their money back if you have more savings to put down and own a higher portion of equity. It’s also a good idea to save up for any cosmetic updates or repairs in future.  

 

Look for house buying schemes

There are various schemes in Nigeria that can help you buy a home. For example, you have the National Housing Fund which aims to provide better financing solutions to contributors of the scheme (more on this in a section below).

 

Also Read: 7 Things You Need To Know Before Buying a Land

 

Make sure you can afford a mortgage

Knowing that you can afford a mortgage loan is essential. Mortgages are not short term commitments. A mortgage is something that you will need to be committed to for a number of years ahead, so you need make sure you do your research properly in order to get the best results. Simply subtract your monthly expenses from your income to see how much you can pay towards a mortgage each month. Banks also have mortgage calculators on their websites.

 

Final Note

You may be eligible for getting a mortgage if you are formally employed, on a full time and permanent basis. You are also required to have saved a sufficient deposit and not have any bad outstanding loans or history of such.

 

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