If you have ever heard of someone being defrauded while trying to get a land or home in Nigeria, then you are not alien to the kind of problems Bongalow seeks to solve in Nigeria. However, the company has evolved into a lot more than this since it started.
Bongalow started in 2019, as MyAwayHome, to help Nigerians in diaspora who wanted to get homes in Nigeria with a secured and entirely digital process to access home loans, mortgages at competitive prices and without the risk of being defrauded.
At the Nairametrics Business Half Hour Show, Bongalow founder, Kelechi Nwokocha noted that the company rebranded into Bongalow in December 2020 as a way to accommodate a larger market and move from providing diaspora mortgage solutions for African immigrants living in the US and the UK, to become an all-encompassing, Africa-focused, digital mortgage platform.
Nwokocha recalled that the inspiration to start the company came years ago when his mother lost some significant sum to fraudulent agents in Nigeria while trying to get a home in the country.
“I thought that if she had suffered this, then there could also be others going through the same challenge. So, I decided to come up with a platform that would help them source the property they need safely, and where necessary secure the right mortgage that suits their needs,” he explained.
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With a simple application on Bongalow, clients both in Nigeria and diaspora access no less than 16 mortgage offers from different banks, and can then make a choice based on the available information. This cuts out the length of time that would have been spent walking into the different banking halls in search of the best rates and creates a transparent and entirely digital process that ensures that applicants get the best terms possible
Bongalow operates an asset-light business model, with about 15 staff in its Lagos office, and makes money off commissions. The applicant simply needs to tender a credit report, and also prove his income source, alongside other documents to get started.
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Challenges for the mortgage business in Nigeria
While European countries are probably well adapted to the mortgage business and terms, the same cannot be said for Nigeria.
According to Nwokocha, the first challenge for mortgage business in Nigeria is affordability. Many families cannot own a home because of their income, and the same income further restricts the size of mortgage loans they can access for the purpose.
“To secure a mortgage, the individual needs to have up to 30% of the value of the property to cover the initial costs and the closing costs, and this means we are talking about N15 million if we have a property worth N50 million. Most people cannot afford this, not just because of the living standard in Nigeria but because of a poor savings culture.
No mortgage bank will give you a loan size that will put you in a position where you have to spend more than 33 % of your monthly take-home in repaying the loan. That means the income level also affects the loan size one can access, and it is a challenge for a lot of people who wish to own their homes,” he explained.
To resolve this challenge for clients, Bongalow is set to roll out the “rent to own” product that will allow clients start with as low as 10%, and raise another 10% of the property value within the first 2-3 years before they are moved into the traditional mortgage plan with the mortgage banks to gradually pay off the rest.
This eases off the burden on the clients, allowing them achieve their housing goal at their pace.
In subsequent years, the company aims to build a mobile banking app to allow people save for a property and shop for a mortgage. “We want to be the number 1 name in the mortgage market. We are excited about making affordable home financing more accessible for every African.”