You are qualified to access housing mortgage in Nigeria (2)

You don’t have so much money going toward your mortgage every month that you cant enjoy life or take care of your other financial responsibilities’-Dave Ramsey.

When Dave Ramson, the America’s best selling Author made the above assertion, he probably didn’t have the Nigerian situation at heart. Really, Mortgage should rather give you the benefit of a future performance today while taking away the responsibility of a one-pay-off.

About two editions ago, I elucidated the availability of housing through Mortgage. This edition had my phone lines busy and email boxes buzzing with torrent of mails by teaming readers who wanted to have more in-depth information on how they could truly access their houses of choice through Federal Mortgage Bank of Nigeria.. I have chosen to satisfy the curiosity of such readers by dedicating this edition to answering some of their enquiries.

As discussed in my immediate past edition, The National Housing Policy of 2004 was an advance step to help Nigerians access Houses of their choice thereby reducing the then Housing deficit that stood at close to fifty percent to a more manageable figure. It is therefore an anomaly how less of this the average Nigerian know. I will therefore, dedicate this particular edition to outlining some of the steps an intending applicant would take to access the Mortgage facilities through Federal Mortgage Bank of Nigeria.

The first step an intending Mortgage applicant should take is to enroll with the National Housing Fund, NHF. This enables you contribute a little percentage of your income to this pull of funds set up to serve as a reservoir of funds for the Federal Mortgage Bank of Nigeria. The National Housing Fund is not the exclusive reserve for employees of the various tiers of Government or employees of corporate organizations alone as has been widely believed by majority of Nigerians. Any one who earns income from an endeavour can be a contributor. All you need to do is to approach any of the approved Private Mortgage Institutions (PMIs) to start up with this. Your contribution to the NHF is yours and not for the Federal Mortgage Bank of Nigeria or the Private Mortgage Banks. Some callers who contacted me on this had expressed apprehension that they might be short-changed on this. This fear is unfounded. The National Housing Fund contributory scheme is personalized. You can move it from one work place to another. This you are expected to have done for not less than eighteen months continuously before you are qualified to approach the PMI to help commence the packaging of your loan facility. Though the National Policy says six months, it has been more in practice to have contributed for up to eighteen months. At least, this is basically in practice by the Private Developers in partnership with the PMIs and the FMBN.

When you approach the PMI or an approved developer, you will be required to present certain documents which must include the passbook for your NHF Contribution. Other requirements may include your statutory identification (Driver’s License, International Passport, and Permanent Voter’s Card etc). A statutory bill, your income statement of account among other requirements.

Some readers also wanted to know what time of their building process they could approach a designated institution for the Mortgage loan. Well, I must say, the FMBN does not give you money to buy land. You are expected to have a titled land free from all encumbrances before you approach the FMBN for a Mortgage loan. You are expected to deposit the title to the land as your collateral. Family receipts or purchase receipts do not mean the same thing as title. A titled land is expected to have statutory recognition.

It is not a closed chapter if you do not presently have a piece of land. This is where the Private Developers come in. The PDs have their lands and in most cases have built houses for offer. All they need do is to take your documents from you and approach a PMI to package your facility along the value in your offer letter. The headache of the land procurement and title wahala is that of the Private Developers who ensure their lands are free from any form of impediments. This does not necessarily increase the cost of the loan or influence the loan interest. The PMIs and Private Developers work within the framework set out by the government through the regulatory agencies. The developers will only charge a statury controlled percentage as Processing Fee. Such percentage is a minute fraction of the sum applied for not the total value of the housing unit.

I interacted with a major player in the industry a few weeks ago. In his opinion, the Private Developers are better positioned to help subscribers facilitate their loans processes. He believes the Private Developers understand the specific need on the applicants better. According to him, they are the ones on ground in terms of the roll out of the housing units. They can capture the very essence of the individual need and appropriately meet the requirements of such applicants after taking their status and financial strength into consideration. They would have done some level of affordability evaluation and properly advised the applicant before presenting their applications to a suitable PMI. The builders, unlike the PMI has lesser workload, they can have ample time to critically position an applicant’s request and help come up with a more suitable package that will not put the applicant in a debacle. With this; the Private Mortgage Institution will have fewer jobs to do.

Every one in the chain of processing this mortgage for suitable applicants told me it is easy, unencumbered, transparent and affordable. Nigerians are free to work into a Mortgage institution to ask questions. A private developer confided in me that the absence of the National Housing Funds registration should not even be a barrier. He said their jobs go beyond that. They have facilities to help address an applicant’s immediate housing challenge at no extra cost while helping to position such individual for a suitable housing mortgage. Prof. Ahonsi told me he believes almost every Nigerian is qualified. He said some under rate their capacity just because they have refused to seek a professional’s advice in this respect. In his words, ‘how can an individual on an annual rent of Three hundred thousand naira, and he is not owing say he can not access a mortgage facility when same can give you a house in a Developer’s estate while the payment goes into servicing your mortgage?.  Such thinking stem out of ignorance. The truth is, even if you pay such rent for a hundred years, the house does not suddenly become yours. You rather get notices of increment almostly yearly and threts of eveiction should you fail to comply. If you sign up for a mortgage package, your payment is fixed. Even if the housing unit appreciates in multifold in a short while, unlike your yearly rent, your mortgage is fixed. So, it should be a better option.’

For successful applicants, you have up to thirty years to repay your loan at  six percent. Your repayment period is purely decided by you. However, your current age, work status or employement priod are a major considerations in taking a repayment plan. For instance, if you enroll in a mortgage plan at thirty years old, you may have up to thirty years to repay your loan, If you are thirty years and you have worked for ten years, you have up to twenty years to repay your loan. You are expected to liquidate your loan by the time you are sixty years or by your retirement year depending on which comes first. For self-employed applicants. The age at entry point is the focal point after passing your affordability checks. Now, imagine a Mortgage of Three million, five hundred thousand naira for fifteen years at six percent? Its close to  peanut for even an Artisan. This is the flexibility and beauty of accessing Housing through Mortgage. As a developer asked me jokingly; ‘would you not rather put your three million naira into some meaningful business, and use a fraction of the accruing profit to service a mortgage and watch your business grow instead of pouring same into a building project that is not expected to be engaged in producing further income?’ This is how rewarding it is to get into one! Like Dave Ramsey said and as cited above. Mortgage should not be such a pain in the neck. It should rather be a soothing balm that is expected to mitigate a nagging pain. Every one should find it suitable and accessible. So, talk to a professional today as Mortgage in Nigeria has come to stay!

Akhigbe Dominic