A mortgage loan is a home loan that allows you to purchase a property on the condition that you pay back the agreed amount over a period. When you sign up for this type of loan, it will expect you to pay the amount in installments on a monthly basis.
If you cannot make the payment on your mortgage loan, the lender may repossess the property and sell it for cash or keep it as collateral. To give the lender that power, they’ll require certain prerequisites from you to approve your loan request.
If you wished to Apply for a Mortgage Loan in Nigeria, then Consider These 5 Things:
1. Check Your Credit Report Before Applying
Your credit score can affect your interest rate, closing cost, and the maximum amount for which you will qualify.
In that case, you should work on improving your credit score before applying for a home loan. It’s not always easy to do, especially if you already have some credit issues, but there are ways to do it. Pay all your bills on time, don’t open new accounts, and keep old ones active. Remember that it takes several months before changes in your score show up.
Credit scores used to be a thing of the regular Internet stories for many Nigerians. Before, in Nigeria, a borrowing company would only ask questions if there was any outstanding loan with any bank before they’ll give you a loan.
But now, with the accreditation of standalone bodies like First Central Credit Bureau and CRC Bureau Limited to keep records of individual and organizational FISCO scores in Nigeria, many people would ignorantly fall victim to a high rate of bad credit scores with as little as N5000 loan from the quick loan apps.
Most of these quick loan apps are usually terrible for you because they literally destroy your image by posting your name and tagging you as a fraudster to your contact lists, including strangers who do not know you, business associates, schoolmates, etc.
Above all, it also can send reports to these credit monitoring organizations to keep records which, when you need important loans, lenders might see before considering you.
2. Your Employment Status
When you apply for a mortgage loan in Nigeria, the lender will want to know if you’re employed to find out if you have a stable source of income. In Nigeria, we classify employment as a full-time or part-time job.
You’ll need to show that you’ve been working for at least two years and that you earn enough money to repay the loan. It’s not just your salary that’s considered, but also any bonuses and/or overtime payments.
It’s also very important that your income is stable and regular. If your income varies from month to month, this might count against you in securing a mortgage.
If you are a salaried person, then it is easier for you to get a mortgage loan than a self-employed person or a trader. If you have a steady job and a good salary, then it won’t be difficult for you to get a mortgage loan from a bank. The same thing goes if you are an employee of the federal government, state government, or local government.
The following are the required documents before applying for a mortgage loan:
- Employment details
- Endorsement from your company
- Salary slips
- Identification documents, and
- Latest Bank Statement
3. Understand the terms
When applying for a mortgage loan, it is important to understand the terms behind the mortgage. You should also ensure that you can afford to pay for the house by considering your other monthly expenses, living expenses, and income. This will help you determine how much of a mortgage you can afford.
Some terms include the fact that the property you are acquiring with a mortgage can be used as collateral, assuming you cannot pay in over 1 month…etc.
4. Research Mortgage interest rates
Interest rates on mortgages can vary by quite a lot, so it is important to research to find out what rate you will probably get.
The interest rate of any mortgage loan will vary depending on several factors, such as the size of the loan, the amount of down payment that you make, and whether you have any existing debt on other loans and credit cards.
Some lenders operate on fixed interest rates, while some take a floating interest rate. So, as you continue to pay your loan, the interest rate continues to reduce, eventually.
5. Find a mortgage broker who works for you
The mortgage loan is typically the largest loan you’ll ever repay, so it pays to find a broker who works for you. Your mortgage broker will help you get the best deal possible on your home loan.
There is also a lot of paperwork involved in applying for a loan. It’s not uncommon for applicants to spend hours filling out the application and all the supplementary paperwork that goes along with it.
Having someone who can help you navigate through that process is invaluable. A qualified mortgage broker can walk you through the entire process and make sure you don’t miss any major details in the application.
- Think about how much interest you will have to pay annually on the loan. Don’t forget to include a possible refinance cost.
- Find out what your current financial situation looks like and project a few years ahead financially.
- Check out online mortgage calculators that will help you create your monthly budget, then project it for the next 20 years.