We all have visions of our ideal cars, jobs, and most often, our dream homes. Eventually, we reach a point where we want to transform these dreams into reality. But what happens when we don’t have the financial means to do so?
Do we simply abandon our dreams? Of course not. This is where the idea of loans becomes relevant. It’s important to recognize that loans aren’t as daunting as many people believe.
It’s common to encounter the notion that loans are financial traps, whether you’re in Lagos or anywhere else in Nigeria. However, there are numerous stories of individuals who have successfully used loans to start businesses or build their dream homes.
Given the different perceptions about loans, it’s essential to understand how they work, including their benefits and drawbacks. In this article, we’ll specifically discuss mortgages.
Contents
What is a Mortgage?
A mortgage is the kind of loan given by a bank or mortgage lender to individuals in order to help them finance the purchase of their houses. Loans are very important as it helps you meet up your financial needs. For instance, you can borrow more than half of the expenses to complete your house.
After which the house is then used as a collateral for the money borrowed. By now, the mode of mortgage payments must have been discussed. A typical mortgage payment consists of four parts: principal, taxes, interest, and insurance.
The following are some of the things to note from the explanation of what a mortgage is:
Mortgage Lender
A mortgage lender is a body, most times bank, that provides the finance needed for the purchase of a real estate property. After which the loan has been given, the mortgage lender uses the mortgage as security. This is done in order to secure the money borrowed in order the borrower defaults.
A mortgage lender does not only provide services for those seeking to own real estate properties. They also provide services to owners of real estate properties who seek to use the money borrowed for other things. In this instances, their already owned properties become the mortgage.
Principal
The principal is the total amount of money borrowed from the mortgage lender in order to buy your home. It is basically the money borrowed and you have to pay back. That is, if your mortgage is N500,000, your initial principal balance is also N500,000.
Taxes
Here, the taxes are simply the amount you pay as a house owner. The amount payable is usually calculated based on the value of your house or property.
Interest
Interest is the add-ons you pay for borrowing a particular amount of money. In this case, it is the additional payments payable on the mortgage. It is, however, best explained as the amount the mortgage lender charges on the money lent to you.
Insurance
In understanding how mortgage payments work, as mentioned earlier, the above are some of the things you should note. Insurance or Mortgage insurance is another important thing to take note of.
For mortgages, the most commonly discussed forms of insurance are the Homeowner Insurance and Mortgage Insurance (MI).
The Homeowner Insurance is usually to safeguard your home and belongings against damages from an unexpected disaster. When covered by the insurance, and an unexpected disaster happens, you are provided with money for repairs or replacement of damaged items.
Though the Homeowner Insurance is not mandated by law in Nigeria, however, it is required by mortgage lenders before you can be given a mortgage.
On the other hand, mortgage insurance is to protect the lender in case the borrower defaults.
Things To Consider Before Getting A Mortgage
Now, the crux of the matter is, do you really need a mortgage? The truth is, most people find it hard to determine if they need a mortgage or not. Whether you have decided or yet to decide, there are certain things you should consider before putting pen to paper.
Do You Have A Stable Income?
One of the very first things the mortgage lender would consider is if you have a stable income. It is only logical in order to determine if you can or will be able to pay back. It will be unwise not to consider your income history before approving your mortgage.
Another thing is that it helps the mortgage lender ensure that you do not over borrow. In a case whereby your annual income is way lower than the principal you are requesting, you would be adviced appropriately.
Also, having a stable income allows the mortgage lenders to be able to decide the best payments plan for you.
How Much Are You Willing To Spend?
Whether or not you need a mortgage plan also depends on how much you have and are willing to spend. This can be as a result of having a tight budget. Sometimes, it is having a limited fund and many things to spend it upon.
It is often the case when you intend to buy a house and cannot make full payments. A mortgage plan allows you to make part payments – depending on agreements – and still use the remaining funds to sort other things.
How Long Are You Staying?
The whole idea of a mortgage plan is to get yourself a home – in most cases, a dream home. So, if you have found that dream home, the next question is how long would you be living there? If you are definitely going to get a mortgage for your home, it should be where you have a long-term plan for.
There are different mode of payments for different mortgage plans. Hence, you definitely want to be able to cover your payments within the stipulated time.
Mortgage Homes In Lagos
It is no longer news that Lagos is the populated state in Nigeria. Though it is considered the smallest in terms of mass, it’s importance cannot be overlooked. It is Nigeria and West Africa’s economic and commercial capital. People come into Lagos in their thousands because of the vast opportunities.
How then does the state accommodate its large population? Frankly, it is no doubt that, for now, there are more people than houses in Lagos. It is one aspect the Lagos State Government continues to look into as it continues to push for a smart city status.
However, this does not mean people do not own houses in Lagos. It is also not unusual to see people buy houses in different parts of Lagos. There are several houses for sale in Lagos. Why some might be outright payments in cash, there are a good number of mortgage plans too.
Below are some of the mortgage homes in Lagos:
- Imperial Homes Mortgage Bank
- Union Homes Savings and Loans Plc
- AG Homes
- Infinity Trust Mortgage Bank
- Lagos Homs
- Aso Savings & Loans Plc
- Union Homes Savings & Loans Plc
- Exodus Homes and Shelter
- Platinum Mortgage Bank Ltd
- Abbey Mortgage Bank Plc
- GT Homes Ltd
Whatever your plans are on becoming your own landlord, getting a mortgage shouldn’t be much of a headache. If you are also considering buying a land in Lagos or anywhere else in Nigeria, visit PropertyPro.ng for the best listings.
You can also share your opinions or/and experiences on mortgages with fellow PropertyPro.ng readers.
