What is a Mortgage Loan and what’s its significance? What are the Steps to Getting Approved For A Mortgage Loan In Nigeria?
A mortgage is a contract between you and a lender that provides the lender the right to repossess your home if you don’t repay the money you borrowed plus interest.
Mortgage loans are used to finance the purchase of a home or to borrow money against the value of an existing home.
As you might think, one of your dreams when looking to buy a home is to do it without stress or worry. You want to ensure that the entire mortgage procedure goes as easily as possible for you. Here are some guidelines to help you be considered for a mortgage loan in Nigeria.
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Getting Approved For A Mortgage Loan In Nigeria
What are the important things to take note of just before applying for a mortgage loan in Nigeria?
Solve Your Debt Problems First
One of the most crucial things you can do to get accepted for a mortgage is to get rid of all your debt troubles first. You could have all the money in the world to buy a new home, but lenders won’t be able to get past your obligations if you have a lot of them.
By addressing your debt issues first, you may ensure that you have a strong credit score and report, which will make getting a mortgage loan easier. You must first address the issues that led you to seek a loan in the first place before applying for a mortgage loan.
Obtaining a mortgage loan necessitates financial stability as well as a consistent revenue stream; otherwise, no lender would bother to look at your application form twice.
Havd A Good, Steady Income And Good Job History
Before completing a mortgage deal, the lender must be confident that their funds will be returned. As a result, the lender will analyze your income as well as your work history. A person who can’t retain a job and is always paid off, for example, may be denied a mortgage.
It is not enough to establish that you can afford monthly mortgage payments; you must also demonstrate that you have the capacity and willingness to make those payments for many years.
Getting approved for a mortgage loan is about more than your current income; the bank will want to see proof of your current and previous work history as well as your stability as a homeowner, such as an established financial history, job history, business industry, etc.
If you don’t earn enough money to cover the needed amount or if your income is inconsistent, the bank may reject your loan application. It’s a common guideline that must be strictly obeyed because it’s in the lender’s best interests.
Pick A Home That Is Within Your Budget
Because many people abuse the financing opportunity, Nigeria has highly severe limits on home purchase loans. The recommendations are targeted at reducing risky borrowing, which is one of the reasons why Nigeria has an edge over other nations because it does not yet have the same housing difficulties as others.
When seeking to buy your dream home, one of the first things to consider is whether or not the house is within your budget. This implies the house you want to buy should be one you can afford comfortably and still have money left over in case of an emergency.
You must know how much you can spend on down payment and a monthly mortgage payment while still having money left over. Spend some time going over the specifics so you know exactly how much you can afford to pay each month. Choose a home that is within your budget; otherwise, the bank’s examination of your mortgage loan may be hampered.
Seek Information From A Qualified Personnel
Being directed by a mortgage lending expert might go a long way towards getting you the financing you want. The individual is better knowledge about the mortgage procedure, the best way to contact the bank, and he may even be able to assist you in estimating the appropriate house for your budget.
It’s actually very beneficial to have a professional guiding you because it can be difficult to figure out on your own at times. You may be unaware that your mortgage payments should not exceed 50% of your gross monthly income. However, an expert can help you do this and improve your chances of getting your loan authorized.
Finding an affordable mortgage rate, understanding the terms of your mortgage, finding the right type of property, getting pre-approved for a mortgage, understanding the costs associated with purchasing a home, and determining if mortgage lending is truly what you want to do are just a few of the decisions involved in buying a home. You can get help from an agent or an expert in this area.
Save Money For A Down Payment (20%)
The golden rule for having a mortgage loan authorized in Nigeria is to put money aside for a down payment. A down payment is the amount of money you put down on your home when you buy it. Typically, you’ll need to save enough money to cover 20% of the home’s purchasing price.
The mortgage lender will cover the remaining 80% of the cost. This means you’ll need to put down 20% of the purchasing price or have 20% equity in your property. The reason for this is that you do not want to end up owing more on your home than it is worth if you decide to sell it in the future.
This is referred to as being “upside-down,” and if you are upside down on your property, you will owe the bank the difference between what it sold for and what you still owe on it when you sell it. If you don’t want to end yourself in this predicament, make sure you save enough money for a 20% down payment before you apply for a mortgage loan in Nigeria.
Making a 20% down payment on a new home will, of course, reduce the amount of interest you pay on your mortgage loan. As a result, it’s a standard rule for any Nigerian mortgage lending company to approve any mortgage loan.
Most banks have rigorous mortgage lending standards, and only a small percentage of applicants are authorized for mortgage loans for various reasons. This reduces your chances of securing a loan, especially if you are self-employed or do not have a consistent monthly income, which is why you should have a stable job before considering mortgage loans.
Some ways of being authorized for a mortgage loan have been discussed previously. These are strategies you may use to improve your chances of getting a mortgage loan, even if you don’t fulfill all of the bank’s standards.