In a bid to boost the delivery of affordable housing for Nigerians, the Federal Mortgage Bank of Nigeria (FMBN) has disclosed that it spent an additional sum of N112 billion and built additional 8,700 new homes between 2017 and 2020.

This information was revealed in a statement issued by the Head, Corporate Communications Group of the Federal Mortgage Bank of Nigeria, Mr. Lawal Isa, on behalf of the Managing Director, Mr. Ahmed Dangiwa.

Highlights of the statement:

• The total sum of N265 billion has been disbursed as housing fund by the Federal Mortgage Bank of Nigeria. This sum indicates an increase of N112 billion or 74%, up from N152.5 billion disbursed by the institution as of 2017.
• About 8,700 new homes have been built between 2017 and 2020, representing a growth of 43 percent to attain a cumulative of 29,133 funded housing units.
• Within the period, the National Housing Fund (NHF) collections increased by 80% or N186 billion to reach a cumulative amount of N418 billion as of September.
• Home renovation micro-loans increased by over 2,000% from about 2,600 loans to about 56,000 loans in the last three years.
• About 570,000 contributors had been added to attain a contributor base of over 5.1 million NHF subscribers.
• 34 out of the 36 states of the Federation were compliant regarding workers’ contributions, with five states resuming contributions within the past three years.

Home ownership is usually top on the list of all the reasons why people want to invest in real estate, globally. Real estate is in no doubt an indispensable tool designed for the support and sustenance of human life. It is also a tool created for mankind to express creativity, desires, and ambition. When the Coronavirus pandemic spread across nations, governments were forced to give shelter-in-place orders, causing us all to stay in our homes for months. This shows that homes are indeed a necessity. Yet, it is beyond reach for many people in developing countries who desire to own one.

Mortgage loans are one of the common options for homeownership in many countries because it is believed to create some ease of home ownership. In Nigeria, mortgages have not been effective. In cases where it is accessible, it is expensive.

The case for mortgage ineffectiveness is a result of many underlying issues bedeviling our development as a nation. This article seeks to provide you with a creative homeownership option that is legitimate and efficient in achieving your real estate investment goal as an individual seeking to own a home.

The mortgage option requires you to provide equity of 20 – 30 percent of the total value of the home sale price. This also means that the home will be the collateral for the loan as you increase your equity over a period of years. Loss of income or ability to earn an income during the tenure of the mortgage translate in most cases to losing the home to the lender.

The loss of ability to earn income high enough to repay a mortgage is bad in itself. Losing that home to the lender makes it worse as you would have lost your homeowner status and in some cases, the equity.

Invest-to-homeownership

An alternative to the mortgage option is the invest-to-homeownership. It is a creative real estate investment option. It allows you to invest equity with a real estate business or private home developer. The equity is used to execute projects and turned over until the equity builds up to an agreed amount required to own your home. This option creates leverage that is not available in the traditionally popular options.

The invest to homeownership option is ideal when you do not have enough cash to buy a home in one fell swoop of payment. It also does not need you to pay interest. Instead, the returns on your equity accumulate towards your home purchase. The real power of compounding in real estate comes into play.

Five major conditions that make invest-to-homeownership work

1. Your choice of the real estate developer

The developer must have a track record of executed and sold-out residential units. Invest-to-homeownership relies a great deal on the integrity of the developer. The first test of the integrity of a real estate entity is the track record and the quality of claims.

You should choose based on qualitative pieces of evidence and not emotions or appeal.

2. The project locations.

The developer must have ongoing residential projects in strategic locations of the city. These projects must be real and positioned to sell out. This is because not all locations are profitable for all kinds of real estate business goals.

3. The readiness of the developer to work with you

The developer must be desirous to accept your equity on respectable terms. This is because people management can sometimes be a tall order. If managing a bank loan will be easier, a developer may choose the bank above accepting to use your funds to execute projects thereby growing your homeownership equity.

4. Your mindset and belief

Many people, hold the belief that owning a home in Lagos, Nigeria is hard. This belief sets you up to miss creative opportunities.

Invest-to-homeownership option is a simple yet effective way to achieve a homeownership goal. A cheaper option that takes money out of your pocket fewer times than the popular mortgage option.

5. Ability to adopt and trust the process.

Your readiness as an intending homeowner and willingness to trust a transparent process when you find a developer who offers you one. The real estate investment terrain in Nigeria is still evolving. With many unpalatable experiences dotting the landscape. These experiences are due to a combination of several issues. Some real estate stakeholders have been able to master some fundamentals of the evolving terrain and can minimize foreseeable issues. Your ability to identify a trustworthy process, helps you harness the opportunity to own your home interest-free.

With the invest-to-homeownership option, the risk of losing your home to a lender in the case of protracted default or loss of income is eliminated. The developer that you choose to work with is obligated to deliver to the terms that will be agreed upon at the point of investment. You should carefully choose a stakeholder who can and will deliver on your homeownership goal in record time.

You may be interested or have questions about the possibility of the invest to homeownership option. In addition to letting you know this option is possible and available, we want to answer your questions too. Send ITHO via WhatsApp to 07062028677 or email to [email protected]

The Nigeria Mortgage Refinance Company (NMRC) has completed its N10 billion 7.20% Series 3 Fixed Rate Bond to boost funding for affordable mortgage in the country.

The bond, which was facilitated by DLM Capital Group as the Financial Adviser and Issuing House, has created opportunity to investors and home seekers in Nigeria.

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According to the bond brochure, the net proceeds of the exercise will be used to refinance eligible mortgage loans originated by the participating mortgage lending banks, and investors.

The Managing Director/CEO of NMRC, Kehinde Ogundimu, explained that the bond was well received by investors, and was subscribed 3.28 times over the projected amount.

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He said, “This has been described to be the highest subscription for a Nigerian bond so far.

“This series 3 bond issuance goes to further reinforce our commitment to encourage, promote and facilitate home-ownership in Nigeria. This issuance gives an opportunity for people like you and I to take mortgage loans at an affordable rate and buy houses.”

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Ogundimu added that one of the biggest challenges in the mortgage industry is affordability, but with the rate at 7.20%, he expects that from the issuance, there will be a substantial decrease in the mortgage rate to the ultimate mortgagors going forward

“Other things like cost of houses is also expected to drop as this interest rate will offer some cost reduction to developers, unlike in the past where they had to borrow money for short periods at over 30% interest rate,” he added.

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What they are saying

Sonnie Ayere, the Group CEO, DLM Capital Group, explained that the success of the bond is an indication that it would go a long way in helping the average Nigerian access mortgages loans.

He said, “The bond which was aimed at ₦10billion was oversubscribed and we received commitments for ₦32.8billion, this I believe is the highest subscription for a Nigerian bond thus far. This indicates a strong investor appetite for the long-tenured asset and re-emphasises the market’s confidence in the operating model of NMRC.

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“Also, we are cognizant of the housing situation in Nigeria and the challenges faced by Nigerians in accessing mortgage loans due to its high rates, so helping NMRC to achieve this gives us a sense of fulfilment as it will immensely help ordinary Nigerians access mortgage loans at low rates and ultimately help them buy their own homes.”

What you should know

NMRC was established to bridge the funding cost of residential mortgages and promote the availability as well as the affordability of good housing to Nigerians by providing increased liquidity in the mortgage market through the mortgage and commercial banks.

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The company is driven by substantial private sector participation consisting of commercial banks, primary mortgage banks, insurance companies, private equity investors and international financial institutions through the Ministry of Finance with the public purpose of developing primary and secondary mortgage markets, and raising long-term funds from both domestic capital market and foreign markets to provide accessible and affordable housing in Nigeria.