How to Own a Home in Nigeria Through the Nigerian Mortgage System with Ease

This updated 2023 guide is tailored for individuals aiming for a ₦90,000 monthly mortgage repayment, focusing on purchasing a home in Abeokuta. It includes detailed examples of mortgage providers and the necessary documentation for First Bank as an example.

Step 1: Understanding the Nigerian Mortgage System (2023 Update)

• The NHF loan from FMBN continues to offer competitive rates. For a monthly income of ₦300,000, this could be a viable option.

Step 2: Assess Your Financial Eligibility (2023 Trends)

• With a monthly income of ₦300,000, a ₦90,000 monthly repayment is a financially prudent target, adhering to the 30% rule of income allocation for housing.

Step 3: Choose a Mortgage Provider (2023 Options)

• Examples of Mortgage Providers:
  • FMBN: Offers the lowest interest rate at around 6% per annum.
  • Stanbic IBTC: Offers competitive rates, possibly around 10-12%.
  • Access Bank: Interest rates might range from 15-17%.
  • GTBank: Typically offers rates at the higher end, around 18-20%.

Step 4: Get Pre-Approval (2023 Process)

• Apply for pre-approval at First Bank with your financial documents, aiming for a loan that matches your ₦90,000 monthly repayment plan.
  Determining whether a ₦90,000 monthly mortgage payment is feasible in Nigeria depends on several factors, including the total loan amount, the interest rate, the loan term, and the borrower’s financial situation. Here are some considerations:
  1. Loan Amount: The total amount borrowed will significantly impact the monthly payment. A smaller loan amount could feasibly have a ₦90,000 monthly payment.
  2. Interest Rate: Mortgage interest rates in Nigeria can vary widely. The higher the interest rate, the higher the monthly payment will be for a given loan amount. As of my last update, typical mortgage rates in Nigeria could range from single-digit percentages (under government-backed schemes) to as high as 20% or more in the private sector.
  3. Loan Term: The duration of the loan also affects the monthly payment. A longer loan term will generally result in lower monthly payments, but also increases the total amount of interest paid over the life of the loan.
  4. Down Payment: A larger down payment reduces the loan amount, which can make a ₦90,000 monthly payment more achievable.
  5. Borrower’s Financial Health: Lenders will also consider the borrower’s income, credit history, and other debts. A borrower with a strong financial profile may secure more favorable loan terms.

  To determine if a ₦90,000 monthly payment is possible for a specific situation, it would be advisable to use a mortgage calculator or consult with a financial advisor or a bank in Nigeria. They can provide a more accurate assessment based on current interest rates, your financial situation, and the specifics of the Nigerian mortgage market.

Step 5: Find Your Home (2023 Market)

• You find a suitable property in Abeokuta priced at ₦20 million, fitting within your budget and loan pre-approval limit.

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Step 6: Property Valuation (2023 Standards)

• Engaging an estate surveyor and valuer under NIESV or ESVARBON to value the property is a crucial step in the mortgage process. The valuation serves multiple purposes:
  • Ensures Fair Pricing: It confirms that the property’s asking price is in line with the current market value, ensuring you pay a fair price.
  • Mortgage Approval: Banks and mortgage lenders require a professional valuation to determine the loan amount. They need to ensure the property is worth the investment, as it serves as collateral for the loan.
  • Insurance Purposes: The valuation is used to determine the appropriate amount of insurance coverage for the property.
  • Future Sale Considerations: A professional valuation can also be beneficial if you decide to sell the property in the future, providing a benchmark for its market value.
• In this case, an estate surveyor and valuer under NIESV or ESVARBON values the Abeokuta property at ₦20 million, which aligns with the asking price and supports the mortgage application process.

7: Finalize the Mortgage Application (2023 Procedure)

• Submit your finalized mortgage application to First Bank, including the valuation report and property details.

Step 8: Legal and Documentation Process (2023 Compliance)

• Engage a lawyer to ensure the property’s title is clear and complete all necessary documentation.

Step 9: Down Payment and Closing (2023 Practices)

• Make a down payment as First Bank requires, typically around 20-30% of the property value. For the ₦20 million property in Abeokuta, this would be around ₦4 million, leaving a loan amount of ₦16 million.

Step 10: Repayment Plan (2023 Strategy)

• Set up a repayment plan with First Bank, ensuring your monthly installments align with the ₦90,000 target. Based on a loan amount of ₦16 million and an estimated interest rate of 15% per annum, it would approximately take around 22 years to fully repay the mortgage. This duration is a simplified estimate and actual terms may vary.

Required Documents for First Bank Mortgage Application:

• Completed mortgage application form.
• Valid means of identification (National ID, International Passport, Driver’s License).
• Proof of income (recent pay slips, bank statements, tax returns).
• Employment verification letter.
• Title documents of the property.
• Valuation report from an estate surveyor and valuer under NIESV or ESVARBON.
• Credit report.
• Any other documents as required by First Bank.

Conclusion: This guide, tailored for a 2023 home purchase in Abeokuta with a focus on manageable monthly repayments, provides a clear roadmap for using the Nigerian mortgage system. It includes specific examples and details to help you navigate each step confidently.