Owning a home is a big dream for many Nigerians, symbolizing stability and security, however, buying a house outright can be tough. That’s where mortgages come in—they help make homeownership possible.
In Nigeria, two popular mortgage options are the National Housing Fund (NHF) and Mixta Flex. Let’s explore these options and how they make owning a home more achievable.
National Housing Fund (NHF)
The NHF is a government-backed scheme designed to help Nigerians access affordable housing finance. It operates under the Federal Mortgage Bank of Nigeria (FMBN).
To qualify for the NHF, you must be a Nigerian worker contributing to the NHF scheme. Also, your employer should deduct a percentage of your monthly income (usually 2.5%) and remit it to the FMBN.
Benefits:
- Low-Interest Rates: NHF offers relatively low interest rates compared to commercial mortgage rates, making it more affordable for homeowners.
- Flexible Repayment: Repayment terms are structured to suit the borrower’s income level, reducing the financial burden.
- Longer Tenure: NHF mortgages typically have longer repayment periods, giving borrowers more time to pay off their loans.
How to Access NHF:
- Register with the NHF through your employer.
- Ensure regular contributions to the NHF scheme.
- Apply for an NHF loan through a registered mortgage lender.
Mixta Flex
Mixta Flex is a mortgage product offered by Mixta Africa, a leading real estate developer in Nigeria. It’s tailored to suit the needs of different income levels, providing flexibility and convenience. Mixta Flex is open to individuals and families looking to own a home, also income level and creditworthiness are key factors in determining eligibility.
Benefits:
- Customized Financing: Mixta Flex offers various financing options tailored to individual needs, including flexible repayment plans and down payment options.
- Quality Housing: Mixta Africa provides high-quality, affordable housing options across Nigeria, ensuring value for money.
- Expert Guidance: Mixta Flex provides expert guidance throughout the home-buying process, making it easier for first-time buyers.
How to Access Mixta Flex:
- Contact Mixta Africa for a consultation to assess your housing needs and financial capabilities.
- Choose from Mixta Africa’s range of residential properties that suit your preferences and budget.
- Apply for Mixta Flex financing through Mixta Africa, providing the necessary documentation and meeting eligibility criteria.
Mastering Mortgage Calculations
Here are key calculations:
-
Mortgage Payment Calculation:
Monthly payment is determined by the formula M = P[r(1+r) ^n] / [(1+r) ^n – 1].
Where:
M = Monthly payment
P = Principal loan amount
r = Monthly interest rate (annual rate divided by 12)
n = Total number of payments (loan term in months)
Imagine you want a N20 million house and the bank proposes a 70% loan (N14 million) at a 5% interest rate over 30 years. With this, your estimated monthly payment would be about N75,530. It is a good gauge to see if this expense aligns with your budget before committing to the purchase
-
Affordability Calculation:
Lenders use the Debt-to-income ratio (DTI) to gauge mortgage eligibility. It is used to measure if you can manage additional debt. The formula is:
DTI = (Total Monthly Debt Payments / Monthly Gross Income) x 100
Using the example above, assuming your monthly debt payment is N200,000, your DTI is calculated at 28.57%.
Secondly, assess your affordability for the house. Since you want to buy a house worth N20,000,000 and the bank is willing to loan 70% of the house value, you will need to pay the remaining 30% as a down payment (N6,000,000).
Considering your DTI is at 28.57%, it is crucial to prevent a substantial increase due to your mortgage payment. Calculating a new DTI with the mortgage payment included shows it would be approximately 39%.
A DTI below 36% is ideal for managing a mortgage. DTIs between 36% and 43% may raise concern, while those above 43% indicate a significant debt burden, raising red flags.
Tips for Managing Your Mortgage Wisely
- Pay on time and in full each month to build a good credit history.
- Consider additional payments to reduce the loan balance and save on interest.
- Shop around for the best rates and get pre-approved before home shopping.
- Regularly review your mortgage and explore refinancing opportunities.
In Conclusion:
Knowing how mortgages work and how to calculate them is essential when buying a home. Whether you’re buying your first home or thinking about refinancing, this will help you make smart decisions, and ensure that you manage your money well and secure your future as a homeowner.
REFERENCES
Federal Mortgage Bank of Nigeria (FMBN). (n.d.). National Housing Fund (NHF). [https://www.fmbn.gov.ng/nhf/] (https://www.fmbn.gov.ng/nhf/)
Mixta Africa. (n.d.). Mixta Flex. [https://www.mixtafrica.com/property/mixta-flex/] (https://www.mixtafrica.com/property/mixta-flex/)
The World Bank. (2020). Nigeria: Mortgage Finance Sector Performance Report. [https://openknowledge.worldbank.org/bitstream/handle/10986/34963/153193.pdf] (https://openknowledge.worldbank.org/bitstream/handle/10986/34963/153193.pdf)
