4 ways to fund down payment on your home

Nigeria reputably has had the most difficult housing problem that has defied solutions for many years now. As of today, Statistics suggest that the country has a housing deficit of more than 21 million housing units, the highest in the continent. There are two simple explanations for this. On the one hand, only a few people have access to mortgages in Nigeria. On the other hand, many people who are working or living in Nigeria cannot afford to buy a home outrightly through savings.  Based on publicly available data, Nigeria has a mortgage penetration rate that is about 1%, This means that only one per cent of Nigeria‚Äôs two hundred million plus population, have the opportunity to access mortgages when buying a home. With the inflation rate at 20.09%, MPR at 15.5%, and minimum wage still around thirty-three thousand naira, most Nigerians can not possibly save up to buy a home. 

Mortgages have historically been unavailable. In most cases, many people in Nigeria can not afford mortgages due to their extensive requirements and high cost. According to some estimates, Nigeria has one of the lowest mortgage-to-gross domestic product (GDP) ratios in the world. For instance, the mortgage-to-GDP ratio in Nigeria is around 0.5%. This is 5,900% lower than South Africa’s 30%. In further comparison, this is also 11,900% and 13,900% lower than the U.S. (60%) and the UK (70%) respectively. Although a number of private developers in Nigeria are introducing instalments as a payment option to ease the burden of home purchases, a number of potential home buyers in Nigeria still struggle to save up the down payment that is usually required. Down payments typically range from 5% to about 70% of the property price and can pose a major challenge for home buyers who do not have sufficient money saved up. What is interesting is that there are a number of options available for home seekers to explore in raising a down payment for their homes. In this article, we will be discussing four (4) of those options.

Pension savings and Individual Retirement Account (IRA)

One unique benefit of owning a Retirement Savings Account (RSA) is that in most cases, you can borrow from your pension funds when in need. For instance, when you want to make a major financial investment like a home purchase. Property seekers who are gainfully employed and are up to date with their pension savings can potentially borrow money from their retirement savings account to buy a property and pay it back later. Payback is usually with interest, and loans can run for as long as 5 years. Failure to pay attracts a penalty of 10% and the loan runs for 5 years. In some cases, you may not have to repay if you take money from your retirement savings account to buy a property. These, however, depend on the regulatory provisions within your jurisdiction, and how well you are able to negotiate with your pension administrator. 

Employer-Assisted Housing Program

Most companies are beginning to realize the importance of employee welfare to their business productivity. To this end, some organisations across the world, are continually developing housing acquisition programs to support employee home ownership dreams. It is important to check in with your human resources department to ascertain what options that are available. In most cases, this type of program comes in the form of loans with little or no interest rates, grants and sometimes as part of employee long-term benefits. This may be a good option.

State and City program

Governments at different levels, usually create housing acquisition programs to support citizens in their homeownership journey. This usually come in the form of grants, low-interest loans and other forms of financial aid. It is important to understand what options are available within your state or city jurisdiction. The Lagos Home Ownership Mortgage Scheme (Lagos HOMS) for instance, was created to encourage and support home ownership of First-Time Buyer (FTB) residents of Lagos State to purchase decent and affordable homes.

Private sector-backed programs or Family and friends

Another viable option to explore would be family and friends, or any other private sector fund programs. You can explore raising the down payment on your home from family and friends. 

Once you have been able to raise your down payment, you can go to BuyLetLive.com and find properties that meet your requirements. If you are an agent, developer or landlord, visit the signup page on BuyLetLive.com to create an account and advertise your properties.

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