Mortgage Bank
A mortgage bank is a financial institution that specializes in business of providing mortgage loans to individuals and businesses for the purpose of real estate purchases. Such banks either lend their own funds or act as intermediaries, connecting borrowers with lenders who are willing to provide their funds. They play important roles in the homebuying process by offering various mortgage products, determining loan terms, and managing the overall loan process, including underwriting and servicing. Mortgage banks may also bundle and sell mortgage loans in the secondary market to investors.
Why You Should Buy Property through Mortgage Banks
Acquiring property through a mortgage bank can offer several advantages:
Access to Funding
Mortgage banks provide a substantial amount of funds to borrowers, making it possible for individuals to purchase property without having to pay the full amount upfront. This offers you the opportunity to fund your home purchase, move in, while you pay back the fund on installment.
Flexible Repayment Options
Mortgage banks offer various mortgage products with different repayment terms and interest rates, allowing borrowers to choose a plan that aligns with their financial situation.
Homeownership Opportunity
A mortgage enables individuals to become homeowners even if they don't have the entire purchase amount. This promotes property ownership and wealth accumulation over time.
Tax Benefits
Mortgage interest payments tax-deductible, providing a financial incentive for homeowners with mortgages.
Build Equity
As borrowers make mortgage payments, they gradually build equity in their property, which can be a valuable asset over time.
Leverage
Mortgage financing allows buyers to leverage their capital, potentially gaining more substantial returns on investment if the property value appreciates.
Spread Out Costs
Instead of paying the full cost of a property upfront, borrowers can spread the payments over the life of the mortgage, making homeownership more financially manageable.
Investment Opportunities
Individuals may choose to acquire property through a mortgage bank as part of an investment strategy, taking advantage of potential property value appreciation.
Diversification of Assets
Owning real estate, acquired through mortgage financing, can be a way to diversify your investment portfolio.
Building Credit History
Successfully managing a mortgage can positively impact your credit history, potentially improving your overall creditworthiness. Although Nigeria's credit rating is not efficient, but with your BVN your credit history can be obtained by any creditor who's interested in your creditworthiness.
It's important for borrowers to carefully consider their financial situation and terms of the mortgage before acquiring property through a mortgage bank.
What to Consider before Choosing a Mortgage Bank in Nigeria
Before choosing a mortgage bank, consider the following factors:
Interest Rates
Mortgage Banks offers different interest rates on mortgage loans You should therefore compare the interest rates offered by different mortgage banks. Even a small difference in rates can significantly impact the overall cost of your mortgage.
Loan Terms
Examine the terms of the loan, including the duration (15, 20, 30 years), and whether the interest rate is fixed or variable. Choose a loan that aligns with your financial goals and preferences.
Fees and Closing Costs
Be aware of any fees associated with the mortgage, including origination fees, closing costs, and any other charges. Understanding these costs upfront helps in accurate budgeting.
Down Payment Requirements
Different mortgage banks may have varying down payment requirements. Find out the down payment of each mortgage bank, and choose the one that aligns with your financial capacity.
Reputation and Reviews
Research the reputation of the mortgage bank. Look for reviews from other borrowers to gauge customer satisfaction and the bank's reliability.
Customer Service
Evaluate the quality of customer service provided by the mortgage bank. A responsive and supportive lender can make the mortgage process smoother.
Prepayment Penalties
Check whether there are penalties for repaying the mortgage early. Some loans have prepayment penalties that can affect your flexibility.
Loan Options
Consider the variety of mortgage products the bank offers. Different loan options may cater to specific needs or financial situations.
Financial Stability of the Bank
Assess the financial stability and credibility of the mortgage bank. A stable institution is more likely to offer consistent and reliable services.
Pre-Approval Process
Understand the pre-approval process. Being pre-approved for a mortgage gives you a better understanding of your budget and can enhance your negotiating power when making an offer on a property.
Additional Services
Some mortgage banks offer additional services, such as financial counseling or insurance. Assess whether these services align with your needs.
Accessibility
Consider the accessibility of the mortgage bank. Whether it's in-person visits, online services, or a combination, choose a bank that fits your preferred mode of communication and access.
Taking the time to carefully evaluate these factors will help you make an informed decision when choosing a mortgage bank for your home purchase.
Top Mortgage Banks in Nigeria
Federal Mortgage Bank of Nigeria
Infinity Trust Mortgage Bank Plc
Platinum Mortgage Bank
Abbey Mortgage Bank
Living Trust Mortgage Bank
AG Mortgage Bank Plc
FirstTrust Mortgage Bank Plc
First Generation Mortgage Bank
Nigeria Police Mortgage Bank Plc