Federal mortgage bank loan in Nigeria [How to apply, eligibility, threshold, etc.]
October 31, 2021
Federal mortgage bank – Are you a low or middle income earner looking to own, build, purchase or renovate a house in Nigeria? If this feels like you, today you’re going to learn how to go about it on affordable budget.
In this guide you’ll get to understand how you can access a Federal Mortgage bank loan.
What is Federal mortgage bank?
Federal mortgage bank is an institution saddled with the responsibility to provide Nigerians like you with loan to finance their housing needs. Mortgage banks lend money to borrowers to collect it back in installment with a fixed interest rate over a period of 30 years.
These housing needs may include,
- Home renovation
- Home purchase, etc.
The Federal mortgage bank has the responsibility to oversee the National Housing Fund NHF, usually a contribution made towards owning a house.
NHF is a savings pattern which sole responsibility is meant to raise long-term fund to further provide the contributors with low interest loans.
Functions of Federal Mortgage bank in Nigeria
- It promotes and stimulates the development of mortgage institutions at every level
- There’s a design put in place to suit the Nigeria’s housing needs for a long time
- It provides licensing authority for secondary mortgage institutions in Nigeria
- It performs a regulatory and oversight functions on the Nigeria’s mortgage lenders
- It harmonizes the mortgage and the Capital market, which provides a link to mobilize foreign and local investment into the housing sector.
- It provides a long term credit services to mortgage banks, from which they can lend to mortgage borrowers at a fixed interest rate payable in installment over a long period of time.
Benefits of Federal Mortgage loan
- Loan measures to upward of 90% of the property cost
- Low interest rate of 6% per annum which sees out the loan tenor
- Repayment is spread across 30 years
- Refunds come with 2% interest on retirement
- There’s this lifeline to a lifetime registration number, etc.
Eligibility for Federal Mortgage loan in Nigeria
To access the mortgage loan you are required to meet a few criteria which is normal with every loan, without which such loan will be abused.
These requirements include the below and any other the bank deem necessary at the time of application
- Whoever is applying should be at least 18 years old and above
- The NHF1 and 2 forms are requisite, which are for both employer and employee forms
- Monthly contributions deduction should be remitted to Federal Mortgage Bank timely which should span across 6 months at least.
- Employer’s passbook should be up-to-date. Note: the passbook is transferable among employers
- There’s a requirement to make at least 6 months contribution to the fund prior application
- The applicant must have and prove the ability to pay back the loan/evidence of regular income flow
- Copy of approved building plan
- Valuation report as prepared by registered surveyors and valuers where necessary
- Your copy of tax clearance certificate for at least three (3) years
- Your pay slips for the past three months
How to apply for Federal Mortgage loan in Nigeria
Sequel to application of this loan, you are not expected to go directly to the Federal Mortgage bank, you are to apply via any accredited primary mortgage institution in town.
However, there are two categories of obligors in this case,
- The institutional obligor and the
- Individual obligor
While the institutional obligor can apply directly to the FMBN, the individual obligor are to apply through any licensed and approved institution.
You are to get and complete an application form issued by the primary mortgage bank or the credit institution.
How much can I apply for?
This refers to a loan threshold as applicable to any borrower with the credit institutions. You may be legible for a loan amounting to about N15 million naira.
However, such credit will not exceed 90% of the property value in view
The interest rate is advised and contain in the National Housing Fund Act, usually is around 6% per annum.
How long do I need to pay back the loan
As an individual borrower, you are at leverage to make the loan repayment through the primary mortgage institution which you accessed such mortgage loan.
The repayment can be made up to 30 years of acquiring such mortgage facility.
Now you understand how you can go about your Federal Mortgage loan, which you can use to finance a new house, renovate an existing house, etc.
The Federal Mortgage bank has the responsibility to respond to your loan request via the primary mortgage institution you interface with.
Owning a house is not as difficult as you think anyway, here’s an opportunity to commence your journey into becoming a landlord today.
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