Mortgage is arguably the most popular consumer loan world over. It is also called Home Finance, Home Equity Refinance, Personal Home Loan or Commercial Loan. The facility is availed either to purchase a property oe used an existing property as collateral for loan.
Oxford Dictionary of English definition “A legal agreement by which a bank, building society lend money at interest in exchange for taking title of the debtor’s property with the condition that the conveyance of title becomes void upon the payment of the debt.
The Merriam Webster dictionary definition “ A legal agreement in which a person borrows money to buy property (such as a house) and pays back the money over a period of years”
Home Loan is an arrangement made by an individual or corporate organization to borrow money from a bank and pay back over a period of years most times longer than other types of loan. The borrower pledges a property to the bank as security for the loan while the bank takes a charge on the property until the loan is fully paid back with interest.
There are different types of Mortgage available in Nigeria
Personal Home Loan:
A loan arrangement where an individual secures a facility with the bank to either buy a property or build one. Some banks offers joint loan where spouses can combine their income to finance and jointly repay their loan.
Home Equity Refinance:
An arrangement where an individual secures a facility with the bank to take advantage of investment opportunity or for other purpose and uses a property he already owns as collateral for the loan.
This arrangement does not require equity contribution. The banks only provides a percentage of the value of the property to the customer as loan.
An arrangement where a corporate organization secures a facility from the bank to either construct or buy outrightly an office complex or a building for commercial purposes.
All Other Loan Types Secured With Landed Property:
This refers to arrangement where a business organization secure fund from a bank to be used for purpose other than buy a property but uses an existing property as collateral for the loan.
The Fact About Home Loan
It is cheaper than rent or lease:
Many people continue to pay for rent all their lives without thinking of owning their own homes. The fact is that you could get a mortgage and pay equivalent (if not less) of what you pay your landlord monthly on your rent and the property becomes yours after the loan has been paid of.
The bank involvement will ensure you are not cheated:
The process of securing a home loan in a bank involves the bank to value the property to ensure that it is being sold at the right price; the bank also verifies the title to ensure the real owner or authorized agent is the one selling to you and that the property and location is not encumbered by government or under litigation and also ensure the property you are buying is in good condition. The bank does all this to protect its own interest in the property but invariably you are also sure your interest is taken care of.
Investment in property all over the world have been confirmed by investment experts as a sure way to increase your wealth. Property is one of the asset that increases in value even with age. Thus you are sure that years down the line the value of your property would have increased in value far beyond what premium you would have paid to the bank on your loan..
Flexible repayment of up to 30 years or more:
Mortgage facilities are structure in a way that it allows you a convenient repayment amount. Debt service ratio of 4:10 is often allowed on your income i.e you are allowed to use only 40% of your income to service the loan. This will allow you enough funds to take care of your other expenses while servicing your loan. The repayment period are also stretched for up to 30 years or more depending on your age and/or years to retirement. This allows you more room to pay back while enjoying comfortable living.
Easy access to bank facilities:
With your mortgage and good track record of payment on your loan, the bank will sure give you a nod when next you need the bank to provide you or your business with finance. After you have finished payment and while the bank’s lien or charge is still on your property, you can still use the same property to secure another finance for you or your business.
The bank ensures your property is protected while loan is still being paid:
Because the property is jointly owned by you and your bank, be assured that while you are still serving your loan. The bank will do all it can to ensure the property is protected at all times. Your insurance will be paid to date, the bank will ensure the insurance company fulfill all claims obligations without stress. All other issues that may threaten your ownership of the property and invariable servicing your loan will have the bank to contend with while your loan is still being serviced.
So please approach your bank with a mortgage request today to be home owner and enjoy the comfort and advantages of owning your own home.