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Consumer Information

What is a mortgage?

A mortgage is a loan secured from a mortgage lender to buy a property for the purpose of home-ownership. The loan is then paid off in instalments over a set period of time. The length of time that the borrower agrees to take to pay off the loan is known as the Tenor of the mortgage. A mortgage is made up of two elements

  • The capital i.e. the original amount borrowed to buy the property; and
  • The interest i.e. the amount charged to lend you the money

The mortgaged property secures your promise that the money you borrowed will be repaid. If the loan is not repaid as agreed, the lender can take possession of the property and sell it to recoup the money owed.
For most people, a mortgage is the largest and most serious financial obligation they will ever make.

How to choose a mortgage?

When choosing a mortgage there are three important things to note:

Interest Rate

Interest rate is often seen as the most important consideration when choosing a mortgage. In general, borrowers look for a mortgage with the lowest possible interest rate.The lower the interest rate the less money you have to pay back over the mortgage term.

Each mortgage lender has its own standard variable rate (SVR) of interest. These can vary by several per cent, although most mainstream lenders will be within a couple of per cent of each other.
However interest rate deals vary from lender to lender and sometimes the same lender may even offer different mortgage deals. There are four main types of interest rate offers:

Variable – rates change in line with CBN interest rates
Fixed – rates are fixed for a set number of years
Capped – rates are variable but guaranteed by the lender not to exceed a set amount; and
Discounted – borrower pays a lower interest rate for a set period after which the interest reverts to the lender’s SVR

Mortgage Fees/ Charges

These are also called administrative fees and are charged by lenders to cover costs of valuation, legal, banking administration etc. Lender fees can be anything from a several thousand naira to millions of naira, depending on the mortgage you choose.
Some lenders fees are higher than others for no apparent reason so make sure you study all the fine print in the mortgage agreement before you sign. Ask questions to help you understand what each fee has been charged for and try to negotiate. Some lenders will be willing to reduce their fees. Finally if you are unsure about the details of a mortgage agreement and need some advice, a reputable Mortgage Broker can help you for a fee of their own.

How can I access a mortgage Facility?

A mortgage can be obtained directly from any of our Primary Mortgage Banking Institutions. . Click here to access our directory of Nigerian mortgage lenders. Or you can use a mortgage broker to find you the best mortgage to suit your particular needs. In Nigeria low interest mortgages can also be obtained from government via the NHF scheme. Click the button below to find about the NHF.

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