Lets take a look at the most common mortgage types available in the country.
National Housing Fund (NHF) is a Federal Government scheme, which entitles all Nigerians above the age of 21years in paid employment to a low interest, government funded loan. Members of the scheme contribute 2.5% of their monthly salary to the fund through Federal Mortgage Bank of Nigeria. The maximum amount obtainable under the NHF used to be N5 million but has since been increased to N15 million. The borrowed capital is repayable over a maximum of 30 years at the rate of 6% interest.
Any Nigerian above the age of 21. They must be a contributor to the National Housing Funds for a period of not less than six months. For individual borrowers there must be satisfactory evidence of regular flow of income to guarantee loan repayment. This condition is easy to ascertain for applicants in paid/salary employment. For the people in private/trading businesses, there might be need to resort to their bank statements of account.
The loan shall be for the purpose of building, purchasing or renovating residential accommodation. No loan shall be for refinancing.
Except for institutional borrowers who can apply for the loan directly from Federal Mortgage Bank of Nigeria (FMBN), individuals can only apply through a duly licensed and accredited Primary Mortgage Institution (PMI) of their choice and not directly to the FMBN. Loan applications are also to be obtained from the same PMI.
The property (residential accommodation) for which the loan is sought shall serve as security for the loan. The property must have valid title documents (C of O; R of O, Deed of Sublease, Deed of Assignment or Letter of Allocation). The property shall conform to the existing planning laws and regulations and building plans approved by the appropriate authorities. The mortgage property must possess sufficient value to recover the loan. The mortgage property must be insured against hazards. Applicant must accept to take up both “Fire Insurance Policy” and “Mortgage Protection Policy”. The loan shall be secured by first legal mortgage between the applicant and the PMI.
An individual borrower is entitled to a maximum amount of N15 million. No individual shall be granted a loan in excess of 90% of the cost or value of the property to be mortgaged.
Such as real estate developers or construction companies involved in direct housing construction may apply for an NHF loan. Hitherto, beneficiaries were limited to individuals but access has recently been extended to institutional borrowers.
The House Ownership Account has to be operated for a specified period. This varies from one PMI to another. Usually it ranges between 6 – 12 months. It will afford the PMI the opportunity of having a record of applicant’s savings pattern. Repayment figure should not exceed one third (1/3) of total net income on a monthly basis. Except in cases of outright purchase of property, disbursement of the loan is made in instalments and in relation to the stages of development.