Over the years, housing has appeared to be one of the major social economic problems plaguing the Nigerian society. Accommodation seems to be the highest household expenditure to every average income earner in Nigeria. Getting to own a home or even renting a decent apartment in Nigeria is largely dependent on one’s income. Many Nigerians have resorted to living in chanties and make shift structures some of which are decent enough for animals. Rural-urban migration has in recent years increased the population of the major cities across Nigeria thereby creating room for overcrowding, increase in crimes, increase in destitute and more worrisome, building collapse. From the forgoing, it is obvious that lack of a home gives rise to many vices and crimes which in turn threatens the survival of a society. It is against this backdrop that financing a home becomes paramount in the economic planning of any serious government.
There are many ways of securing a home which include:
- private individuals effort
- corporate /cooperative effort
- government intervention
The private or cooperative efforts require a lot of rigorous processes especially in the area of assessing funds for financing a home. Several mortgage products sold by financial institutions are cumbersome to process due to the fact that a large population of Nigerians who need these houses are found in the informal sector. Majority of the populace are either unemployed, underemployed, or self employed. This situation has kept the mortgage products out of reach of many. For individuals, below are the requirements for obtaining a mortgage loan from mortgage banks.
You need to fulfill some requirements, before you can be eligible to get a home mortgage loan in Nigeria. Some of the requirements are mentioned below:
- An introduction letter from your employer: You need an introduction letter from your current employer to ensure that you are a permanent employee of that company. This cannot suffice for many who are artisans and traders.
- Copy of documents of the property
- Valuation report of the property:
- Cash flow projection; at least to show you can repay the loan
- Pay slips: One has to provide pay slips of the last three months
- Bank account statement: You have to produce your bank account statement of last six to twelve months.
- Offer letter from agent: You need to produce an offer letter from the agent confirming your interest to purchase of the property.
Most of these requirements stated above are very difficult if not impossible to meet by millions of Nigerians as they also bother on credit risk. No financial institution would want to give out loans to citizens with volatile income sources. So, Nigerians in this category must be equipped economically through job creations and serious awareness on record keeping as well.
The Federal Government has waded into this problem through the establishment of The Nigerian Mortgage Refinancing Company (NMRC) and The Federal Mortgage Bank of Nigeria (FMBN). These institutions have suffered serious setbacks as a result of using non experts in real estate financing, politics, and lack of funding. Nigeria has moved back and forth for many years with a lot of indecisive approaches towards solving housing problems; twice, the ministry of housing has been created and scrapped. This time around, it is merged with the Ministry of Works.
In my humble opinion, I feel that housing should be under the ministry of finance and the central bank (housing is more of financial planning than projects) By so doing, The pension Fund Administrators (PFAs) can integrate housing financing programmes in their services. Mortgage banks can work closely with PFAs and develop plans for contributors to access housing finance with their pension funds. This will enable financial experts come up with a solid plan to enable all pension contributors have access to homes. This will also eliminate all bottle necks involved in getting access to funds. The pension contribution was recently increased to 20%, this should be a way of putting the pension funds to a beneficial use for the contributors. The PFAs can also develop a plan to integrate all those in the informal sector through cooperative societies and trade unions. This is a sure way of getting many Nigerians to finance their homes without having to deal with all the rigorous processes involved.