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  If you would like to own a home in Nigeria, you will have to either build it yourself or purchase an already constructed one from its developers. Regardless of the option you choose, you’ll have to spend a fair bit of money on making it yours. In this article, we’re assuming that you’ve settled for the latter—buying a house. How would you go about financing a home purchase?
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This is a pertinent question; not everyone can shell out all the money that’s needed to purchase a house in one go. Here, we’ll go over 4 ways to finance your home purchase in Nigeria.

Housing Schemes

This approach involves the potential homeowner saving up for their home over time via a ‘contributory savings scheme’; when they have attained a certain threshold of savings, they will qualify to apply for a loan which will enable them to get the home they want. The greater the savings they’ve made, the higher the loan amount they can apply for or be granted. An example of a housing scheme in Nigeria is the National Housing Fund (NHF), to which workers in Nigeria may contribute 2.5% of their salaries, in the hopes of eventually qualifying for a housing loan from the Federal Mortgage Bank of Nigeria (FMBN).

Cooperative Societies

Here, a group of people contribute the funds to a common pool which is used to buy property. Upon purchase, the property may be shared amongst the members of the cooperative or rented out so that it generates income for them. Typically, members are expected to contribute a certain amount of money to be eligible for ownership of a house. This model is particularly suitable for low-income earners, who do not have the funds to acquire a house on their own. However, there’s the risk that some members may default on their contributions, making it difficult for the broader group to finance the purchase of property.
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Mortgage Financing

Mortgage financing means that a financial institution—usually a mortgage bank –provides a loan to an intending homeowner, with which that person purchases a house. Typically, the house serves as the collateral for the loan; the lending institution can take over it if the debtor is unable to meet the terms of the mortgage on or before the agreed-upon deadline. In most cases, the lender (bank) will require that the home buyer contributes at least a fraction of the total cost of the house. This financing option isn’t the most popular of the options available, partly because mortgages in Nigeria often come with double-digit interest rates.

Rental Purchase

If you’re keen on quickly moving into the house you’re still trying to purchase, you could go for the rental purchase route (also known as rent-to-own). In this case, you’ll enter into a lease agreement with the landlord, which will allow you to rent the house for a fee and take over ownership at the end of the lease period if you decide to do so. The amount paid to the landlord for the lease includes a sum that reflects the purchase price of the house. If you do decide to buy the house, that amount will be deducted from the money you pay to acquire it.
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Final Words

As we said at the start of this article, you don’t need to have all the funds for purchasing a home at your disposal before you’re able to do so. You can go with one of the four tracks we’ve discussed here to secure a house of your own.
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This article was first published on 3rd January 2024 and updated on January 10th, 2024 at 8:54 am


Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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