Hello house,

I just got an offer of a house at a give away price of 10 million in kaduna, and I don't have money available for the house, I have a house in abuja where worth atleast 30 million that I collect annual rent of 1.5million, can I use the rent being collected annually as principal repayment source if I approach a bank to fianace the purchase of the house in kaduna ? Am willing to give my house in abuja as collateral and also the house I want to buy in kaduna will also be a security.

What do you advice and which bank can easily heed to such demand without wasting time.

Thank you

HAH:
Hello house,

I just got an offer of a house at a give away price of 10 million in kaduna, and I don't have money available for the house, I have a house in abuja where worth atleast 30 million that I collect annual rent of 1.5million, can I use the rent being collected annually as principal repayment source if I approach a bank to fianace the purchase of the house in kaduna ? Am willing to give my house in abuja as collateral and also the house I want to buy in kaduna will also be a security.

What do you advice and which bank can easily heed to such demand without wasting time.

Thank you

1. Do you have an investment account with these finance houses? They should be able to give a lower rate that commercial banks, I think?

2. I think banks would do the 20-25 recent range in annual repayment plans. That's something, shouldn't you consider cheaper alternatives?

3. I wouldn't advise using your property as collateral for Nigerian banks but you seem to have limited choices.

Using just your returns on rent from the Abuja house -- bar over the top increase, aside maintenance and issues with occupants --, It would take 6-7 years to repay the loan, I don't think banks would like such medium term turn around.

I don't have real experience with Nigerian banks in real estate deals.

Cc:
Jpphilips
LordAdam
Davide470

cedaraustine:


1. Do you have an investment account with these finance houses? They should be able to give a lower rate that commercial banks, I think?

2. I think banks would do the 20-25 recent range in annual repayment plans. That's something, shouldn't you consider cheaper alternatives?

3. I wouldn't advise using your property as collateral for Nigerian banks but you seem to have limited choices.

Using just your returns on rent from the Abuja house -- bar over the top increase, aside maintenance and issues with occupants --, It would take 6-7 years to repay the loan, I don't think banks would like such medium term turn around.

I don't have real experience with Nigerian banks in real estate deals.

Cc:
Jpphilips
LordAdam
Davide470

Thank you very much for this good advice, the property I want to buy here in kaduna is just too good to leave it is offered for 10M but can easily sell later for 15M, I have other house in abuja that I put up for sale but no one is even pricing it may be because of the location which is kuje, the one in town at P&P three bedroom bungalow well finished is the one I collect 1.5M for And I don't want to sell it.

HAH:


Thank you very much for this good advice, the property I want to buy here in kaduna is just too good to leave it is offered for 10M but can easily sell later for 15M, I have other house in abuja that I put up for sale but no one is even pricing it may be because of the location which is kuje, the one in town at P&P three bedroom bungalow well finished is the one I collect 1.5M for And I don't want to sell it.

Then finance it through another means. 25 percent per year will sink you if your repayment plan is just N1.5 M from the Abuja house.

Except you would do something quick with the Kaduna house (when you get it) that would boost the repayment effort, or eventually get a buyer for the Kuje building.

Think am well?

cedaraustine:


1. Do you have an investment account with these finance houses? They should be able to give a lower rate that commercial banks, I think?

2. I think banks would do the 20-25 recent range in annual repayment plans. That's something, shouldn't you consider cheaper alternatives?

3. I wouldn't advise using your property as collateral for Nigerian banks but you seem to have limited choices.

Using just your returns on rent from the Abuja house -- bar over the top increase, aside maintenance and issues with occupants --, It would take 6-7 years to repay the loan, I don't think banks would like such medium term turn around.

I don't have real experience with Nigerian banks in real estate deals.

Cc:
Jpphilips
LordAdam
Davide470

Terrific advice.

@HAH,

Credit in Nigeria is effed up. And I mean effed up real bad. Conventional mortgage loans in the US have around 5% or less interest rate with 20% or less (sometimes as low as 3%) down payment requirement. Use one of the government-backed mortgage programs and you could be saving more money.

Nigeria's case is very different. As cederaustine said, interest rate is between 20-25% interest rate and minimum down payment of between 20% to 30% (excluding any closing costs that can range from 0.25% to 1%).

For a 10m home, that's a down payment of 2-3m with annual interest of 2-2.5m (if you go for fixed instead of ARM and also excluding your principal mortgage payment).

If the maths doesn't bother you (it does bother me since this is not a primary residence), then you'd need to go to mortgage institutions, not your average run-off-the-mill deposit banks. Some of the deposit banks have mortgage subsidiaries (like they have insurance subsidiaries) such as Stanbic IBTC, GTBank (GTHomes), First Bank. But there are other mortgage financial institutions that often affiliate with banks that you can approach directly. Here's a list of five to check out --https://www.tolet.com.ng/blog/5-top-mortgage-institutions-in-nigeria/.

That said, you have to check multiple offers and negotiate. We are in a recession, meaning it is a buyer's market. They need your business. 10m is not a lot, but it also means the chances of default is low, which is a plus in their books. And a 1% interest rate reduction is 100k savings per year. First Bank Mortgage offers term repayment plan of as low as 5 yrs (so cederaustine calculations of around 7 yr repayment shouldn't pose a problem for the majority of mortgage institutions).

Typically, you do not have to put down a collateral if you approach a mortgage institution, although they'd need to do an asset and income verification check (to assess your ability to repay), so you'll have to pen it down on a form and provide c/o and other docs to verify ownership. It doesn't mean that they should be able to seize your other homes or assets if you default. If you default, the only home you should lose is the home you're taking the mortgage for.

I think I've covered the most important things. But you should also contact your financial advisor and lawyer. You should have them to navigate the waters for you and protect you should things go south. It's a wild west out there.

-Lord

LordAdam16:


Terrific advice.

@HAH,

Credit in Nigeria is effed up. And I mean effed up real bad. Conventional mortgage loans in the US have around 5% or less interest rate with 20% or less (sometimes as low as 3%) down payment requirement. Use one of the government-backed mortgage programs and you could be saving more money.

Nigeria's case is very different. As cederaustine said, interest rate is between 20-25% interest rate and minimum down payment of between 20% to 30% (excluding any closing costs that can range from 0.25% to 1%).

For a 10m home, that's a down payment of 2-3m with annual interest of 2-2.5m (if you go for fixed instead of ARM and also excluding your principal mortgage payment).

If the maths doesn't bother you (it does bother me since this is not a primary residence), then you'd need to go to mortgage institutions, not your average run-off-the-mill deposit banks. Some of the deposit banks have mortgage subsidiaries (like they have insurance subsidiaries) such as Stanbic IBTC, GTBank (GTHomes), First Bank. But there are other mortgage financial institutions that often affiliate with banks that you can approach directly. Here's a list of five to check out --https://www.tolet.com.ng/blog/5-top-mortgage-institutions-in-nigeria/.

That said, you have to check multiple offers and negotiate. We are in a recession, meaning it is a buyer's market. They need your business. 10m is not a lot, but it also means the chances of default is low, which is a plus in their books. And a 1% interest rate reduction is 100k savings per year. First Bank Mortgage offers term repayment plan of as low as 5 yrs (so cederaustine calculations of around 7 yr repayment shouldn't pose a problem for the majority of mortgage institutions).

Typically, you do not have to put down a collateral if you approach a mortgage institution, although they'd need to do an asset and income verification check (to assess your ability to repay), so you'll have to pen it down on a form and provide c/o and other docs to verify ownership. It doesn't mean that they should be able to seize your other homes or assets if you default. If you default, the only home you should lose is the home you're taking the mortgage for.

I think I've covered the most important things. But you should also contact your financial advisor and lawyer. You should have them to navigate the waters for you and protect you should things go south. It's a wild west out there.

-Lord

thanks bro, I will surely bookmark your contribution

What is the update?

Did you manage to seal the house deal in Kaduna state?

LordAdam16:


Terrific advice.

@HAH,

Credit in Nigeria is effed up. And I mean effed up real bad. Conventional mortgage loans in the US have around 5% or less interest rate with 20% or less (sometimes as low as 3%) down payment requirement. Use one of the government-backed mortgage programs and you could be saving more money.

Nigeria's case is very different. As cederaustine said, interest rate is between 20-25% interest rate and minimum down payment of between 20% to 30% (excluding any closing costs that can range from 0.25% to 1%).

For a 10m home, that's a down payment of 2-3m with annual interest of 2-2.5m (if you go for fixed instead of ARM and also excluding your principal mortgage payment).

If the maths doesn't bother you (it does bother me since this is not a primary residence), then you'd need to go to mortgage institutions, not your average run-off-the-mill deposit banks. Some of the deposit banks have mortgage subsidiaries (like they have insurance subsidiaries) such as Stanbic IBTC, GTBank (GTHomes), First Bank. But there are other mortgage financial institutions that often affiliate with banks that you can approach directly. Here's a list of five to check out --https://www.tolet.com.ng/blog/5-top-mortgage-institutions-in-nigeria/.

That said, you have to check multiple offers and negotiate. We are in a recession, meaning it is a buyer's market. They need your business. 10m is not a lot, but it also means the chances of default is low, which is a plus in their books. And a 1% interest rate reduction is 100k savings per year. First Bank Mortgage offers term repayment plan of as low as 5 yrs (so cederaustine calculations of around 7 yr repayment shouldn't pose a problem for the majority of mortgage institutions).

Typically, you do not have to put down a collateral if you approach a mortgage institution, although they'd need to do an asset and income verification check (to assess your ability to repay), so you'll have to pen it down on a form and provide c/o and other docs to verify ownership. It doesn't mean that they should be able to seize your other homes or assets if you default. If you default, the only home you should lose is the home you're taking the mortgage for.

I think I've covered the most important things. But you should also contact your financial advisor and lawyer. You should have them to navigate the waters for you and protect you should things go south. It's a wild west out there.

-Lord

very insightful contribution

nht

Were you able to secured the loan? And which bank?

HAH:
Hello house,

I just got an offer of a house at a give away price of 10 million in kaduna, and I don't have money available for the house, I have a house in abuja where worth atleast 30 million that I collect annual rent of 1.5million, can I use the rent being collected annually as principal repayment source if I approach a bank to fianace the purchase of the house in kaduna ? Am willing to give my house in abuja as collateral and also the house I want to buy in kaduna will also be a security.

What do you advice and which bank can easily heed to such demand without wasting time.

Thank you