Lagos-based real estate financial advisory firm, Pison Housing Company (PHC), has disclosed that it is acting as mortgage loan originator and professional strategic development advisor to originate mortgages worth $9 million (about N1.35 billion). According to the outfit, the mortgages will be disbursed by Zenith Bank Plc. in partnership with an unnamed international development finance institution.
Akin Arogundade of PHC said that the scheme has the objective of creating access to mortgages for the low-middle income segment of the Nigerian housing market and giving them the rare opportunity of owning their own homes.
Though details of the transaction are still sketchy, Arogundade noted however that the property in question must be below the N15 million selling price, and should posses a “good root title” such as a Certificate of Occupancy (C-of-O).
He advised developers that the project can be in different locations in the country, but should have statutory building approvals and permits/licences.
“With a minimum of 50 percent prospective off-take for the project, it has to be at least 70 percent completed. The programme creates a viable exit for the developer from the transaction,” Arogundade stressed.
He explained that the transaction attracts an interest rate at 17 per annum, and that a beneficiary would make an equity contribution of 20 percent of selling price of property.
With the tenor put at between three and seven years, he added that target customers should be economically engaged Nigerians (preferably in paid employment).
Arogundade went on: “Title documents of property being financed will serve as collateral security, while use of property should be preferably owner-occupier. Principal repayment can be made monthly, quarterly, half-yearly or yearly; and there will be no penalty fees on mortgage pre-payment.”
For a house valued at N2 million, the home seeker’s equity contribution (20 percent of total cost) stands at N400,000; interest rate payment (at 17 percent) is N272,000, while the entire principal repayment is N1,872,000. Similarly, the projected monthly repayment (over 84 months) is N22,285.71, even as his monthly household income must be at least N74,285.71.
In another instance, for a home wearing a N13 million price-tag, the home seeker’s equity contribution (20 percent of total cost) stands at N 2,600,000; interest rate payment (at 17 percent) is N1,768,000, while the entire principal repayment is N12,168,000. The projected monthly repayment (over 84 months) is N 144,857.14, even as his monthly household income must be at least N482,857.14.
By Michael Simire