Housing is one of man’s key needs. Most people would like to own their own houses. Unfortunately, there are far too many obstacles stifling the achievement of this dream of owning their own homes. In spite of Nigeria being Africa’s largest economy with a GDP of $510 billion, the housing and construction sector accounts for only 3.1% of the rebased GDP. Producing about 100,000 units houses per year, for a country of nearly 170 million, there’s a shortfall of an additional 700,000 units needed each year. So, each year, there’s an accumulated housing deficit somewhere in the region of 17 million units. When you add to this fact that some of Nigeria’s major urban centres like Lagos, Abuja, Ibadan and Kano have a growing housing demand that’s about 20 percent per annum; it is clear an intervention had to be made. The housing challenge had to be tackled from the foundation and the key obstacle to home ownership in Nigeria has been lack of access to housing finance. Housing finance in Nigeria, where it exists is grossly inadequate. Nigeria has 84 Primary Mortgage Banks (PMBs) and 20 Deposit Money Banks (DMBs).
Yet, lending by the DMBs for mortgage loans is less than 1 percent of their total assets. In the end, most Nigerians have no choice but to fall back on on personal savings to pay for their home
Q. What is FG’s 1st 10,000 Mortgages Scheme about?
A: The Federal Government is commencing a scheme in partnership with the private sector; that is, commercial and mortgage banks who are members of Nigeria Mortgage Refinance Company (NMRC) to assist Nigerians acquire their homes through well priced and long term mortgage finance. It will be more affordable due to a longer tenor of up to 20years and convenient due to the more economically viable interest rate being targeted. It is currently aimed at low to medium income earners who want to buy owner-occupier homes of no more than N20m in value.
Q: Who can apply?
A: Those who want to buy houses of N20 million or below are welcome to register. You can apply as an individual or jointly (husband & wife), where both applicants can demonstrate evidence of income. All applicant(s) must show evidence of regular income from his/her current employment, tax compliance and other requirements. People who are self-employed may also qualify provided they show evidence of regular income and a bank account. For self-employed persons, drawings from their business(s) will be used as evidence of income. Persons registering must be Nigerian citizens and over 21yrs old
Q: How can one apply?
A: You can register online at www.housingfinance.gov.ng
Q: Who will give the mortgage?
A: Any Commercial or Mortgage bank that is a member of the Nigeria Mortgage Refinance Company (NMRC) will be happy to assess your final application after registration. A current list of these institutions can also be found on the website. You can also visit the individual sites of the institutions. www.housingfinance.gov.ng. This will be updated from time to time.
Q: How much is available for each applicant?
A: The current maximum amount available to each individual borrower or joint borrowers will be 80% of the value of the property you or you and your spouse are looking to buy subject to a maximum of N16m where the cap on the scheme remains at N20m. For instance, if you wanted to buy a house of N10m, the mortgage lenders would be willing to lend up to N8m if you qualify, with you depositing N2m as your equity contribution.
Q: What is the period of repayment?
A: Repayment period can be up to 20 years. This is a mortgage whose repayment will be made by a “deduction at source” mechanism on a monthly basis for both public and private sector salaried workers. The mortgage rate is expected to be fixed for the tenor of the loan thereby giving you the certainty of fixed monthly payments for the life of the mortgage.
Q: How much initial payment can one make?
A: An initial payment of 20% of total cost of house is mandatory. But applicants who want to pay more than 20% will also be very welcome. Also note that the more contribution you make, the less you borrow and therefore you will have a lower repayment amount. In addition, your ownership of the property is strengthened, the more equity you initially have in the property.
Q: How does one know the monthly mortgage repayment?
A: The mortgage calculator on the Nigeria Housing Finance Programme (NHFP) website can help you calculate the monthly repayment. This will depend on the value of the property you, or you and your spouse intend to buy and the level of equity you, or you and your spouse are willing to initially commit to the purchase. The tenor will also play a role. The longer, the better though not more than 20years to mandatory retirement is ideal.
Q: Can I prepay my mortgage?
A: Yes you can but, different mortgage lenders will have different fees associated with a prepayment. In general pre-payments help you pay off your loan much faster thereby reducing the over interest paid on the loan.
Q: What type of mortgages will be available?
A: Initially only fixed rate mortgages will be available. As the market deepens, we expect different types will emerge.
Q: What are the eligibility criteria for registration?
1. Must be a Nigerian citizen
2. Must be an owner-occupier property (that is you MUST live in the property you buy)
3. Must be at least 21yrs old
4. Must be earning regular income
5. Must be tax compliant
6. Must be able to pay a minimum down payment of 20% of the value of the property being bought
7. Contribution to pension scheme is an added advantage
Q: How long will it take to process a mortgage?
A: This will depend on the mortgage lender, their processes and quality of information submitted by you the buyer. On balance, we would expect the process to initially be no longer than [12weeks]. We expect this time frame to significantly improve as technology and information flows much easier
Q: Does registration mean I have qualified?
A: No, it means your information will be available to be screened by mortgage lenders and where a mortgage lender finds you suitable such lender will be willing to underwrite your application for the property and where finally successful, grant you a mortgage offer.
Q: Will there be a processing fee
A: No not at this point in time. There however may later be a processing fee to cover the administrative cost of managing the portal
Q: What happens after I register?
A: Once registered, you will receive your registration number and you will later be informed of whether your registration was successful. After this, your information will be stored and all available mortgage lenders availed to you for you to choose from.
Q: I have a house in my village; can I also apply for a mortgage?
A: If you have a village-home but want to own a house in the city you reside, you are welcome to register. In addition, those whose village is in urban areas can apply provided you will be owner occupier.
Nigeria Housing Finance Programme (NHFP) supports the establishment and operation of the Nigeria Mortgage Refinance Company (NMRC) and guarantees mortgage by funding the product development including testing and financial modeling .