Ownership of Real Estate (Landed Property) is a dream nursed by virtually everyone, regardless of their financial circumstances, in societies across the world. And that’s investing in landed property is a time tested strategy that leads to sustainable financial success achievement.
With landed property, people who previously were poor, have been able to build their own wealth.
The drive of such people to purchase affordable and comfortable properties is what necessitated the introduction of an effective mortgage system in both the government as well as private sectors.
The purpose of the Mortgage system is to enable people interested in owning real estate achieve their dreams, without suffering needless inconveniences, especially with regard to making required payments.
The system has worked excellently in many parts of the developed world, for decades, enabling even the poor successful work their way to riches, via smart use of mortgage facilities put within their reach.
Sadly, here in Nigeria, the challenges working against effective use of the mortgage system are enormous – though some citizens are still able to take advantage of them as done in the Western World.
The Federal Mortgage Bank of Nigeria is the umbrella body, responsible for managing, monitoring, and regulating the affairs of the mortgage system in the country.
It issues licenses to secondary mortgage institutions that share similar aims and objective…
But what exactly is a MORTGAGE?
A MORTGAGE is a type of loan given to a borrower, to secure a property, while the borrower signs an agreement with the lender, to pay back the loan in specific installments over what is usually a long period of time.
Key functions of a mortgage institution include the following:
- Recruiting new borrowers
To do this, the institution relies on provision of quality services to customers in large numbers. It makes use of the effective in-house systems, to register and offer similar services to new customers, thus nurturing long-term business relationships with them…
They also serve as depository banks too, in that they receive, keep, and monitor the savings of each customer.
- Initiating new loan offers
It only makes sense, of course, that mortgage banks should initiate new loan facilities. It’s a primary function they are required to carry out.
Typically, this function is implemented by an in-house team of workers, sometimes in conjunction with brokers. Basically, they receive the application forms, review details provided on the forms by the applicants, which they then match with the most appropriate mortgage facility offered by their firm.
The service is then formally offered to the applicant-customer once all the preconditions are met.
Key Advantages of Mortgage
- Provides Access to Comfortable Shelter Through Loans.
Like i mentioned in the introduction to this piece, due to its capital intensive nature, owning real estate in many parts of the world is generally seen as a herculean task to accomplish, for majority of ordinary, everyday people, who are not already wealthy.
Mortgage facilities provides relief from this financial limitation, by allowing prospective owners, get access to loans, which they pay back, based on a flexible payment structure, over a long period of time.
- Affordable (Or Pocket-Friendly)
But not all loans are created equal. Some loans come with expensive terms and conditions e.g. high interest rates etc.
The Mortgage system is affordable, especially due to its low interest rate, compared to any model of borrowing.
In most cases, it is secured with collateral, which is usually the property being purchased by the prospective owner. So, if in any event the borrower is financially incapacitated and unable to fulfill the repayment obligations at any point in time, the firm simply forecloses the property to recoup the loan.
Disadvantages of a mortgage
- Huge repayment structure:
In as much as it affords the prospective owner an opportunity to pay over a long period, the borrower is faced with huge repayment goal to achieve – which if s/he fails to do, would lead to loss of the property.
- Payment of Fees
Certain categories of fee payments are required before mortgage can be applied for e.g. legal fees etc.
Then there are Penalty fees – that come due, if the borrower chooses to opt out early etc.
Based on the above, there are a number of trained professionals who play key roles in fulfilling mortgage obligations.
For instance, there are mortgage brokers, who act as middle men between borrowers and the mortgage banks. Brokers assist borrowers to find the most convenient, and cost-effective plan the prospective lender (mortgage bank) offers.
Below, are some key responsibilities of brokers?
- Evaluation of the client’s financial status and history, through the applicant’s submitted form responses – including, all the required documents.
- Assesses the market prospects available mortgage offers, and presents the most appropriate mortgage plan, to the client.
- Acts in advisory capacity, to the client – providing helpful information to help him/her decide what to do, with regard to getting started…
- Providing the mortgage banker’s agreement documents.
- Markets and promotes the firm’s mortgage opportunity to potential clients s/he identifies.
- Provides details of lending institution’s terms and conditions.
- Submits documents completed by applicants, to the lender (mortgage bank).
Buy Your Own Property – Get started with a Mortgage Loan from ANY of the following mortgage banks:
- Trust Bond Mortgage Bank Plc. (Call 01 277 1127)
- Prudential Mortgage Bank Ltd (Call 01 453 9534)
- Abbey Mortgage Bank Plc. (Call 01 270 4866)
- Safetrust Mortgage Bank (Call 01 270 4866)
- Platinum Mortgage Bank Ltd (Call 0803 813 8559)