To be a homeowner is one of the greatest feelings ever. It is the main thing when trying to achieve the Nigerian dream. As a Nigerian, I have always wanted to own a property especially my own house. Asides from the fact that it propels you up the social ladder, it brings with it prestige and respect while also delivering comfort and peace of mind. Owning a home in Nigeria means “you have arrived”!
Right after university, I started looking for a good job. The moment I landed the job with a stable income, my next plan was to “put a ring on it”. On December 2018, it happened. We got married and then travelled to London for our honeymoon. Fast forward to March 2019. My wife announces “we are pregnant”! I immediately thought to myself, “Me? Going to be a father?” I was elated. I was excited and felt my life was coming together with the way I planned. But then my smile turned into a frown. I became deep in thought. “Where will my family live? Where will we raise our baby?” My dream was incomplete. It was time to put my plans into action. My only concern was, “have I saved enough money to make my dreams a reality?”
In 2016, when I began working, I immediately began to save a fraction of my salary with the hope of one day buying my own home. I also did my calculations and knew that my savings alone were not going to fetch me a house. So, I made inquiries from some of my peers who were recent homeowners. One answer kept coming up "I took a loan". One of my close friends even said: "Why save for years to buy a house, when you can get a loan, buy the house and pay for years".
This information was confusing to me as I had formed a strong perception that getting a mortgage loan in Nigeria was harder than getting a US Visa. This was because of the stress, the sheer amount of paperwork you will need to complete, the high-interest rates and short repayment time. I had also heard from some that most times banks just didn’t have the funds to give you. So how did my peers get their loans? And why does it seem like a much easier process? Something just didn’t quite add up. I decided to dig deeper and do more research. To my amazement, I found two key things.
First, individuals are indeed getting loans from banks to purchase their homes and secondly, banks do have funds available to honour these loans. Skeptical, I asked what changed? Why the sudden availability of mortgage loans?
A friend of mine in the mortgage space then broke it down to me. The biggest issue Nigerian Mortgage banks faced was that the limited funds they had, when given as a mortgage loan to a homeowner, would take about eight years for the homeowner to repay the bank (Principal). When you consider the fact that a lot of people do not save their monies in Mortgage Banks via deposits, it makes sense that these banks have limited funds available to provide these mortgages. So, there was a bottleneck.
He then brought my attention to a company called the Nigerian Mortgage Refinance Company (NMRC) which is a long-term mortgage refinancing company. NMRC was able to solve the long-term fiscal challenges of the mortgage banks. So, an approved loan is refinanced by NMRC after six months. This means that the mortgages stay out of the bank for only six months before coming back into the bank via a refinance. This thereby allows the mortgage bank to fund somebody else.
Bingo… problem solved… right? He replied No!
He explained further by introducing another arm of the mortgage solutions equation. A new Market Infrastructure called the Mortgage Warehouse Funding Limited (MWFL).
So, while Mortgage banks had solved their long- term financing problems they still had a short-term problem in the form of very low deposits level. They just didn’t have enough money to fully satisfy the demand of the market.
MWFL came to the rescue by providing immediate funds (pre-financing) to Mortgage Banks which then allowed Mortgage Banks to better meet the demands they had for mortgages (supply). Together, these two vehicles, NMRC and MWFL have been able to solve the funding challenges in the Nigerian Mortgage Industry.
He then stressed that for Mortgage Banks to enjoy the benefits of these funding vehicles however, they must be members to both NMRC and MWFL. I immediately wanted to know the identity of these Mortgage Banks where I could go and get my mortgages.
He happily started listing out the name of the 10 Mortgage Banks currently members of both NMRC and MWFL and they are: Abbey Mortgage Bank Plc, Brent Mortgage Bank Limited, CityCode Mortgage Bank Ltd, Homebase Mortgage Bank Limited, Imperial Homes Mortgage Bank Limited, Infinity Trust Mortgage Bank Plc, Jubilee Life Mortgage Bank Limited, Lagos Building Investment Company Limited, Mayfresh Mortgage Bank Limited, and TrustBond Mortgage Bank Plc. More information can be found on the MWFL website www.MortgageWarehouseFunding.com, he said.
He continued by stating that just last month (August 2019), MWFL funded Trust Bond Mortgage Bank Limited with N88.5m to finance four mortgages.
After this long gist, albeit an educative session on the mortgage industry with my friend, I had a better understanding of mortgages and gained a whole lot of the courage that I decided to go to a mortgage bank and apply for a loan.
I am happy to announce that today is one of my best days. Today, I am bringing my wife back from the hospital into our new house. She had a baby girl yesterday and was discharged today.
Yes, I was able to get a mortgage at a good rate, for 20 years and was able to buy us our dream home. What can I say, "I am a new dad and a new homeowner. Life is good!”
For those who dare to dream, go to any one of the 10 MWFL member banks and make your dream come true….