As most houses for sale in a mega city like Lagos go for extremely high cost, there is the tendency for anyone to give up the idea of buying a house. Most people would rather resort to renting an apartment to pay on an annual basis.
However, getting a house is a lot easier than people think with the use of mortgage loans. In fact, living in a rented apartment for many years could be more expensive than buying a house with the use of mortgages.
In simple terms, a mortgage is a loan in which your house functions as the collateral. The bank or mortgage lender loans you a large chunk of money (typically 80 percent of the price of the home), which you must pay back – with interest – over a set period of time.
Unless you are very wealthy, you are unlikely to be able to buy a house outright. Instead, you can use a mortgage to fund the bulk of the purchase. Mortgages work in such a way that you agree to pay a chunk of the property’s price, known as your deposit, and the bank agrees to fund the rest over a set period of time, usually 25 to 30 years, charging you interest for the privilege.
For a working class person, it is advisable to get a mortgage than sign up to live in a rented apartment continuously. Just as when paying rent on an annual basis, a wise tenant would have to make his monthly deductions to save up to be able to pay up his/her rent when due, also, a mortgage owner would have to make monthly repayments till the mortgage is repaid. This is just like paying monthly rent but with the goal of owning a house.
Furthermore, at the end of the mortgage repayment tenure, the house belongs to the borrower while in the case of the tenant, he/she remains a tenant and not a house owner. All these and more makes buying a house with the use of mortgage more economical than renting an apartment.
On the flip side, getting a mortgage has its demerit. For instance, if you don’t make the monthly repayments that you are meant to, the bank or the building society from which you secured the loan can take the property back from you (a bad news scenario called repossession). More so, most mortgages are applicable to salary earners who get monthly income, hence, leaving out those who do not get their income on a monthly basis.
However, despite the other side of the coin, my resolve still remains that securing a mortgage to buy a house is more economical than renting an apartment. What do you think?