Lifeline for buyers, renters as new financing solution enters housing market

In a limited or zero-mortgage environment like Nigeria, home buyers and renters always look forward to any financing solution that is not only affordable, but also sustainable.

The Nigerian housing market has seen various kinds of financing solutions with Rent-to-Own topping the list. This scheme has been introduced into the market at various times with limited success by Alpha Mead Development Company; Mixta Africa, Federal Mortgage Bank of Nigeria, Family Homes Funds, Lagos State government , among others.

Recently, Growth and Development Limited (GDL), a financial services group, joined the fray with its financing solution called ‘HouseMoni’ , a rent-to-own scheme that is intended to ease and facilitate access to finance for acquiring homes.

Rent-to-Own is a home ownership scheme that allows a prospective home owner to rent a house, pay rent over a specified and agreed period of time and ultimately becomes the owner of the house.

Kola Ayeye, executive vice chairman of GDL, explained at the launch that HouseMoni is part of their continued intervention in the housing market where Nigeria has a deficit burden estimated variously at 20 million and 28 million units by the World Bank and the Central Bank of Nigeria (CBN) respectively.

Ayeye explained further that HouseMoni is designed to offer a financially sustainable path to owning a home. It is also designed to address the near-total lack of appropriate financing options currently available in the country with a fixed interest rate of 9.9 percent over a 15-year tenor.

Read also: GDL unveils financing scheme to bridge Nigeria’s housing deficit

The challenge of housing finance in Nigeria has been the mismatch between loan tenor and project gestation period. While a housing project is always long term, the tenor of loans in the country is usually short. This is made worse by the high interest rate which is hardly stable.

Added to these is the equity contribution which lenders usually demand from borrowers. But the good news now is that this is also part of the problems HouseMoni is out to address. According to Ayeye, the scheme allows subscribers to receive up to three times the amount they contribute in home financing.

Like others before it, HouseMoni facilitates the transition from renting to owning a home and has the ambitious goal of enabling 1.5 million Nigerians to make this transition within the next decade.

Ayaye is optimistic that, by empowering individuals and families to achieve homeownership, CDL would not only be building houses, but also fostering stronger communities and a more vibrant economy.

Oluyemi Adekoya, also a director at GDL, offered more insights, saying that HouseMoni operates with a payment plan that includes a 3.5-year savings period followed by up to 11.5 years of financing, giving a total of 15 years of total repayment period.

He added that the scheme comes with two options which are HouseMoni Classic for individuals seeking to purchase their homes, and HouseMoni Community for groups looking to develop estates together, pointing out that “this scheme represents GDL’s commitment to evolving financial products that strengthen and expand Nigeria’s middle class.”