«Home

Why Are Nigerians Not Morgage Friendly?

an average nigerian does not like d word dept on like n d developed world were they live on morgage.

Avatar
Newbie
35 answers

i believe generally Nigerians are cash based pple, if u worked in any Nigerian banks in any commercial city u'll be amazed at the amont of cash that change hands.

Nigerian banks and mortgage/ credits hmm, if u have anybody wrking in nija banks and he complains of narve crackin targets, its all about generating deposits, so i wonder do we realy have banks or "deposit houses"

get xposed to any credit facilty in nigeria banks and u will regret u did, if the rate was 21% -excluding other charges that can go as much as "negotiating fees"- it can rise to as much as 25% within a year or two, how is dat sustainable.

generally i bliv wit mortgages or any other consumer lone at dat, its just another way of working for another employer(the bank, if u like), consumer loans make u seem comfortable or rich but nada u r not building ur asset column.

i stand to be corrected as these are my views

0
Avatar
Newbie

Mortgage is good but only for the smart and those that are ready to make money off it.

Using mortgage loan to build your abode is unadvisable but you can build and rent it out then let the rent pay the mortgage (the property rent is not going to come down in Nigeria not in fifty years time so don't be apprehensive).

He who is afraid of taking risk will end up serving the risktakers for the rest of his life.

The estates allover the land are built from loans,those of you that are afraid of taking loans will rent houses built with loans when you are young and agile to pay your master the landlord. When you are tired and retired and you can no longer pay the house rent the risktaker will simply throw you out and take young guys to continue to pay him by then you are on the street.

My advise- if you must take the loan decide to rent out some part of the building with that you can take off or reduce the burden of paying back.

Please read-http://www.2much4free.com/2007/09/ways-of-financing-your-building_24.html

And I am surprised the way courses are flying in this thread, the property section has an antecedent, if you guys want to use negative words on each other I think the romance and other sections could be appropriate, this section is for mature minds.

0
Avatar
Newbie

Why get involved with mortgage when you dont have to? In Nigeria, you can build your house gradually which is impossible in UK/US. Hence u need mortgage.

Its impossible (almost impossible) to live in a rented house for 30years without the usual pressure from family/friends to build a house of your own. Hence ppl tend to "hurry up" and build their own.

Stay away from mortgage if you have a choice!

0
Avatar
Newbie

Hi,

Interesting topic and responses.

Pls HAH, i will need your help.

is it possible to send me an email pls

0
Avatar
Newbie

All,

Please let us return to the topic of this discussion:

Why are Nigerians not mortgage friendly?

Let us contribute together based on our own experience locally or internationally. We can help each other if we apply commonsense to our discuss.

Remember that what you write on this forum is being read by many people.

0
Avatar
Newbie

Spoilt and Tayo you can disagree with me as much as you want. I did not respond to you because of that. So I will still say follow the trend of the discussion. ADHD for adults, anyway its no sane doctor would prescribe Prozac to little children. I guess this is your way of showing you are intelligent. read up my friends. lastly I have typos, I did not think I was writting an essay for a test and you know better. lazy, immature, silly "AND" ignorant. two embodiments of it are tayo and the apply named spoilt.

0
Avatar
Newbie

Stop gosh-ing yourself gal, you brought religion into a financial discussion, muddle the whole thing up and start asking gosh-ing questions

moderator please delete inappropriate posts including mine!

0
Avatar
Newbie

Tayo Uk

Please follow the trend of the discourse. I need not say more than that to You

Dis-Guy,

I am not even a muslim. I just know stuff. its called studying. You usually have to open books and read words to achieve that. But that beeing said, You also need to follow the trend of the discussion. What have my bank account having interest got to do with what we said previously? obviously you are lazy. # two; In America there are two types of bank accounts, which one are you talking about? number three, follow the trend of the discourse.

am I relating with babies here. gosh I need to find myself a different post to comment on. such imbe, gosh let me just leave before I finish some people over here

0
Avatar
Newbie

@ Owu gal :I think we are better off dealing with this type of matter without involving or referring to any verses in the holy books. That’s one of our problems in Nigeria and that’s another topic entirely. I won't argue with you about the depression thing but apart from mortgage issue, there are loads of other things to cause depressions in the western world, I think I know that much.

@Poster: Yes, I do agree with Dis Guy, this is 2009 and I think Nigerians just need more education in this area and you will agree with me that there's nothing wrong with borrowing especially when utilised in a very good way. Sometimes you are better off when on mortgage than when renting. The repayment is sometimes the equivalent of rent (in some cases). Paying rent and at the same time trying to save up for your own home might be very difficult for an average Nigerians and that’s why many old people never actually own their own home.

There’s more chance of you leaving your kids with a mortgage-less house than debt when you die and imagine how much that will mean to them especially in Europe or US and even in Nigeria.

I think the main reasons why mortgage /loan system is not really feasible in Nigeria is because of lack of Credit Check Agencies and the fact that it’s easy to change your identity at any given time you are default on repayment. That’s why the rich will always get richer because they have access to this facility more than average Nigerians. Bank would be ready to listen to you if they know you are securing your borrowing on something. The interest rate is really outrageous though but still if you can afford the repayment, you are better off renting.

All these are just my views though and it doesn’t mean I’m right but I would rather be a mortgaged homeowner now than waiting until I’m 70yrs before I can afford to actually put a roof on the house that I started the foundation 40yrs ago. My opinion! We only live once!

0
Avatar
Newbie

@SPOILT

You said "Lets not conclude that mortagages cause depression. One thing I know is that the poor (who cant afford to have mortgages ) do not have healthcare coverage and therefore are not available for your depression studies. Trust me they are depressed too"

Honey, I study people of ALL income levels. I have a population sample of over 30 million people, trust me, I know what I was saying. You dont, so dont assume you know what I am saying. OK? good. You are apparently too spoilt to know better. I am sure you are a teenager, dont you have homework?

@ DIS GUY

Sweetie either you are not a muslim who has read a Quran, you are not a muslim at all, or you dont know the meaning of USURY. so therefore I will enlighten you. So that I do not enable you in laziness, check the dictionary for USURY. use google.

Now,# two check what it says here in the quran Al-Baqarah 2:275. After you have done that,come to this board and repeat what you said before. I bet you wont be able to. so ,

0
Avatar
Newbie

It is paying rent to a landlord for thirty years or your whole life that is a tragedy!

0
Avatar
Newbie

I do research work on health etc. Most of the people interviewed suffer from depression. Most also have mortgages. Please deduce.

Mortgage is not bad. But if American mortgage with 4% interest rate is enough to make a perosn die from heart attack, then How about Nigeria's own with 25% interest rate. If you are a muslim, you should not even be asking about mortgage because I know for a fact that the Quran warns all muslims that Usury ( interest rates) is one of the greatest sins. In medieval Europe, Usury was outlawed,but because they wanted to make profit they re-interpreted Usury to be excessive interest rate. Usury is Usury. Interest is not bad per se until you loose your job I guess, but I just dont understand. The first house I bought, at closing I realized that if I paid my mortgage every month for the next 30 years. I Woould have paid over 250,000dollars in interests. Gosh, if you dont need it, dont get it.

0
Avatar
Newbie

Mortgage cant work in Nigeria so well, a nation where there is no database for people's information, where someone can assume to be anyone at anytime and anyday.

0
Avatar
Newbie

The banks are not friendly, that's Y

0
Avatar
Newbie

Chill guys, the answer is in the question itself, cos we are not Morgage riendly simple, however the intrest rate is, people would always borrow, now for xample,if Im a 45yr Old Biz man,I decide to do research on how I could build a house with minimum cost lets say I build these house/houses on a plot measuring 50/25,this is true ie half the size of what we call 100/50 in nigeria, this is the true size of a plot where a 3 bed house is built in the UK,now I managed to build 20 units,I employ few young OND marketers on %100 commission basis ie%5 commision,the lias with local banks arround and also go into Gov ministries to seek for htose who have long serice still ie Teachers,ministry workers, bank workers etc,I decide to take a risk and makemy mortgage %100,then mayB repayment for my 3 bed house monthly would be =N=17k monthly for a worked out period of years, now would I sucedd or not?does any of this need Gov intervention if so plz point it out  and would there be a flow somewhere also plz point it out for me, Im waiting with al the answer,I know where Im driving at.

0
Avatar
Newbie

The problem is some people dont know how to use debt effectively and its not entirely their fault

the economy is such a bad way bank and other financial organisation cant do anything but what they are doing now-lending to teh rich

Job security is almost zero, unemployment is extremely high and the law is not enforced properly

Debt is a normal part of business, business looking to expand and spread their capital/risk take advantage of loans

more like the average nigerian man is not financially literate!

Do you know banks also borrow money?

0
Avatar
Newbie

The average Nigerian does not like huge debts!

Borrowing 1000Naira from Iya Sikira is one thing, borrowing 10 Million naira from the bank is another! LOL!

0
Avatar
Newbie

because an average nigerian man is not silly

0
Avatar
Newbie

There is a basic logic in mortgage just as there is a basic logic in banking.

In banking someone owns the money and gives to others too. No matter how rich you get you can never be a bank, you can own a bank, but not be the bank. so in similar way mortgage is a system that takes away the house from individual and in a sense place it in the hands of estate firms (just like the bank). So no one gets to really own a house.

0
Avatar
Newbie

motgage is not economic wise so why should i be a part of it?

http://sportsdesks.blogspot.com

0
Avatar
Newbie

even with the low interest rates in the advance countries there is default, how do you expect nigerians to not to default with the high interest rates charged by banks? Average take home pay of most workers including private sector is between 12k - 150k.  22% of N10M is N2.2m somebody earning N300k which are few will earn N3.6M/Annum. how do you want such person to survive?

0
Avatar
Newbie

Thats the idea. You never get to really own the house.

0
Avatar
Newbie

A Nigerian spend his cash - no anything on credit, unlike developed countries where people live and die with debts, credit card debts, mortgage debts etc. I will rather own a house in Nigeria than get a mortgage on a house in London - a three bedroom flat and pay so called mortgage which many are now struggling to pay, and when you cant pay, your house gets taken. Do you realy own the house anyway.

0
Avatar
Newbie

what we do in nigeria nothing but cash accumulation, thereby incuring unecessary charges on the poor masses with all the hidden charges attached to it on qualification for the loan disbursement. a facility you are saving for will definitely increase in price before the tenure reach.so tell me how you now save and your savings and mortgage loan cannot afford you your desired facility. this is arrant nonesense. May God help and bless us all Amen

0
Avatar
Newbie

I really do not know where you guys got all these information from. But, I know that mortgages are accessible at competitive rates in Nigeria. Mortgage loans could be spread over thirty years at 6%p.a. I know the Nigerian govt. has placed much emphasis on tackling the inadequate hosuing in the country. Please dearies, you may wish to open a NHF account, and access mortgage loans from there.

I do not agree with the fact that Nigerian Banks do not give loans. What I fully agree with is that Nigerian loans are not given to any Tom, Dick or Harry. You cant just come up with some stories without any structure on ground like; the market, the technical know-how, adequate planning nor collateral and expect any bank to give you loan. Before seeking for a loan, first have a structure of what you want to do with the funds. Have a repayment plan also because loans are given on the basis of thier repayment plans. Your cash flow must be strong enough to support your loan request. Most Nigerian banks are conservative unlike their American and European counterparts who have reached a level that they can afford to take risks on thier populace. Thier neglect of basic banking/lending principles have led to the universal collapse of many so called giant banks. An average Nigerian bank who tries taking high risks will have itself to blame as thier are no records here. A criminal can go through the 24 banks taking loans for the fun of it without doing something tangible with the funds. Just take a look at Ecobank who tried the credit card scheme with Nigerians. They burnt thier hands immediately because people just took the credit cards, accessed the funds and just refused to pay back. In US or UK, that cannot happen because default on loan re-payment is a grave offence, and one who does that cannot have peace. In Nigeria, it is the other way round as those who default in loan repayment (especially the high networth and connected individuals) have the most peace as they have the rest of their life to enjoy the "banks" funds without any concrete law catching up on them.

Also, there are many structures on ground to accommodate many forms of business/ personal loan request. You cant approach a bank, fresh from secondary school, requesting for agric loan at 22% and expect them to listen to you. You have to approach a bank requesting for the subsidised agric loan (from select banks). It is only then that the bankers/bank will listen to you because they will know you are not ignorant and really know what you are doing.

But to be honest, the cost of bank loans in the country is relatively high. The reason is because a lot of funds are outside the banks in Nigeria, thus, making the cost of funds high as the banks posess approx 30% of the money in circulation. This means that they can only use this 30% to finance all demands for bank loan, hence, the Nigerian banks tend to prefer big projects which give better security and returns on funds. If only Nigeriians will learn to keep thier money in the banks. Just take a walk to the markets, you will be surprised that most traders keep thier money in drawers 24/7. Same as the bus drivers, the mallams, the meat sellers etc.

Also, the almost non-existence of social,business nor personal data in Nigeria makes lending costly as it is difficult to keep track of retail loans. This makes the banks lend(retail loans) to mostly govt workers who have an assured source of repayment(salaries, terminal benefits, allowances).

My advice is "if you have a sound business plan, you may approach financial advisers or investment planners/business analysts". These professionals will first help you package your dreams well, before you approach banks for financial assistance.

Please note that select banks are better for select laons, like the micro-finance banks are better for SME loans, Specialised Mortgage banks for mortgage loans ( since the unification of banks to universal banks, pls while approaching the universal banks for mortgages, seek for thier special mortage finance reps), specialised agric bans for agric loans, BOI for industrial loans. Read-up financial articles for a better understanding of how you can access bank funds towards making your dreams bcome reality.

0
Avatar
Newbie

Hi all, i work in a bank and the notion most of you are having is wrong. at least i know we give out loan personally i have given out over 100 the problem is not that the banks do not  give out loans but most of the customers cannot afford it . Now let me give a simple example in Nigeria today an average 3 bedroom flat will sell for at least8 million let assume this loan is given for 20 years at let say 10% the calculation will be

Principal = 8000000/240 months = 33,333.33

Interest For 1st month = 30/365*0.10* 8,000,000=65,753.42

therefore Principal+interest= 33,333.33+65,753.42=99,086.75(Monthly Repayment)

Now in Nigerian there is a labour law that says you cannot use more than 33.3% of a persons monthly income to service loan. with the above calculation for you to have a loan of 8M at 10% for 20 years you must be earning about N300,000 monthly ladies and gentlemen how many Nigerianget paid 300k monthly

The second problem is identity problem. In Nigerian the government deliberately don'twant to have accurate data of its citizenry because of politics

Abroad you cannot have a person that is not in the data base he can easily be traced unless you are illegal.  from my personal experience 95 % of loan given to salary earners dont go bad because we normally give it out with employers consent  on the other side 50% of self employed default. so am more comfortable with salary earners.

In a nutshell for a common nigerians to benefit from mortgages the goverment and private sectors most increase their employee allowances  and also have a good data based for all adult in Nigerian and also ensure that we have effective credit bureaus to those who are not credit Worthy

cheers

0
Avatar
Newbie

@Lawyer

You're too good. Thanks for enlightening me more on te Mortgage System In Nigeria. I have always had this idea of living in Oyo State and building my house there. I don't have to live in Lagos or Abuja to be successful in life and add value to the lives of Nigerians. Once I have internet connection, telephones and can power my office myself, I can run my business from Ibadan. I dont need to be in debt to Nigerian banks. I can only operate bank accounts with them. Cheers.

0
Avatar
Newbie

Lawyer,

You have really rounded it all up beautifully. It is not only Nigerians at home that should avoid mortgages in Nigerian banks. Nigerians in diaspora should avoid mortgages in Nigeria because the mortgages in Nigeria are designed to enrich the banks by all means. Consumers have no voice in Nigerian mortgage market.

I will prefer to purchase land and build my own house in Nigeria, no mortgage. No hurry in life. Better a peaceful person than live in draconic debt from Nigerian mortgages.

0
Avatar
Newbie

@ Lawyer,

Thank you for that little analysis and word of advice. I have been a great proponent of this mortgage thing, having seen how it works over here in Europe and other places. I am wiser now.

Better to take a land and be doing it small small according to your ability.

0
Avatar
Newbie

Do you know how much you're talking about? N533m after 20 years if it's commulative. God help you !!!

0
Avatar
Newbie

spoke with someone today at stanbic ibtc bank regarding mortgage facility, the guy said i must earn upto 300k a month so as to qualify and minimum facility is N10 million @ 22% and payable over a period of 20 years.

Anyone in the house with more information regarding mortgage please lets keep it coming.

Stanbic Ibtc line 070022557826242

0
Avatar
Newbie

A mortgage is the transfer of an interest in property (or the equivalent in law - a charge) to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

0
Avatar
Newbie

Mortgage at 25% +/- is Life Slavery, Just do the maths,

0
Avatar
Newbie

i am actualy interested in a mortgage facility , have visited some nigerian banks website, and even contacted them, all i hear is the facility is for clients in selected part of Nigeria e.g Lagos , abuja e.t.c.

Am interested if you have any info.

0
Avatar
Newbie

y be on mortgage wen u dont have to?

0
Avatar
Newbie
Your answer
Add image

By posting your answer, you agree to the privacy policy and terms of service.