Requirements For Obtaining A Mortgage Loan In Nigeria

May 3, 2024by MeritAbode0

A mortgage loan is a type of extended financing used for purchasing or enhancing various types of real estate assets. This includes residential properties, land, estates, and commercial buildings such as office complexes, shopping malls, hotels etc.

Mortgage loans are usually secured with the property of the real estate being financed. Essentially, the property being financed by the lender will be seized if the borrower fails to repay the loan. The property will be seized by the lender.

Basically, obtaining a mortgage loan in Nigeria requires understanding the eligibility criteria and following certain requirements, which include:

 

1. Income Requirement

Having a stable source of income is a fundamental requirement for obtaining a mortgage loan. The mortgage bank would check to be sure you have a source of income that will guarantee repayment over the loan periods without concerns. Lenders require evidence of a stable income, which can include salary slips for employees or audited financial statements for self-employed individuals. This proof will convince the lender of the borrower’s ability to meet monthly mortgage payments.

 

2. Age requirement

Age requirement refers to the minimum and maximum age limits that lenders impose on borrowers. Borrowers must be between the ages of 21 and 60. This ensures that borrowers are legally capable of entering into a contract and assess their ability to repay loan over time. Age criteria may also be adjusted based on the borrower’s financial situation.

 

3. Legal documents

Various legal documents must be presented to the mortgage bank when applying for a loan. These legal documents ensure that there are no legal disputes on the property and that the lenders are providing funds to the appropriate owner of the estate. Some of the documents include:
– Personal Identification-includes valid forms of identification such as National ID card, Passport, or Driver’s license.
– Credit History
– Property documents
– Insurance policy documentation- includes homeowners insurance and mortgage insurance
– Employment verification document

 

3. Insurance

Insurance is a crucial aspect of obtaining a mortgage loan as it protects the interest of both the lender and the borrower from unexpected losses, for example, natural disasters, fire, damage. An insurance company is responsible for covering these damages.

 

4. Down payment

Borrowers are expected to make down payments when purchasing a property. The down payment
Typically, this payment ranges from 10% to 30% of the total required amount, with the majority of lenders in Nigeria requiring a minimum of 20%. However, with certain lenders, borrowers may have the opportunity to negotiate for a reduced percentage for down payments.

 

5. Credit history

Lenders often assess the borrower’s credit history to determine the borrower’s ability to repay the loan. It typically involves to an individual’s past borrowing and repayment behavior, including details of loans, credit cards, and other forms of credit. A person is required to have a credit score of at least 650 out of 850 to get a mortgage loan in Nigeria. A credit score helps lenders decide if someone is eligible to get a mortgage loan.

 

Some benefits of Mortgage in Nigeria are:
1. Affordable Homeownership:

Mortgage loans enable individuals to afford homeownership by spreading the cost of purchase over an extended period of time.

2. Capital Appreciation:

Owning a home financed through mortgage offers the benefit of capital appreciation where the value of the property increases over time. As property value increases, it appreciates and homeowners can buid equity in their homes which can serve as a valuable assest.

3. Stability and security:

Mortgage loans provide stability and security for individuals and families. The payment remains consistent over the loan term, unlike renting a house where housing costs may flunctuate or change.

Some Mortgage banks in Nigeria include:

* Abbey Mortgage Bank Plc
* Infinity Trust Bank Plc
* Federal Mortgage Bank of Nigeria
* Refuge Mortgage Bank Limited
* Lagos Building and Investment Company
* Platinum Mortgage Bank Limited
* FirstTrust Mortgage Bank Plc
* Trust Bond Mortgage Bank
* Haggai Mortgage Bank
* Imperial Mortgage bank
* Federal Mortgage Bank of Nigeria (FMBN)
* Family Homes Fund Limited (FHL)
* Resort Savings and Loans Plc

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