In developing economies of the world, people erroneously think and believe that it is too hard if not impossible to access and repay mortgage facility.
This view is basically because people sometimes most often lack basic knowledge of mortgage financing. In this write up, we will take you through SEVEN steps that will help you have a sound pre-assessment of yourself.
Check your income: First step is to objectively evaluate and review your monthly income against your expenses. By this, you arrive at your net monthly income.
Check your savings: Second step is to check your savings. Is your savings steady? Sometimes ask yourself ‘’ Am I saving or consuming all my income’’.
Check your credit record: Do you have existing loan(s)? How much of my income is used to service loan(s) every month? Which loan habit should I drop from my financial life? Credit purchases, credit card, credit shopping, constant exposure to micro credit etc.? This questions are necessary owing to the financial fact that you can only use 33.3% of your monthly income to repayment facility except if you are earning above N500,000.00 (by Nigerian Mortgage Refinancing Company (NMRC) underwriting standard). Therefore, if you do have such facilities running ensure you liquidate them and collect letter of non-indebtedness from the institutions.
Prepare your documents: The forth process is preparing and gathering of your documents both financial and employment/identification. This stage is very essential though sometimes you may not know the expected documents. However, you can contact a mortgage institution for clarification on needed documents.
Determine your down payment: This stage is essentially important because it contains sufficient condition for capacity testing in mortgage financing. It is called equity contribution it is that percentage of the cost of the property that you are expected to put down at the onset. It is your stake in the property. It ranges from 20% to 30% of the cost of the property (NMRC underwriting standard). However you can contribution above the standard which reduces your repayment amount.
Identify a property: At this point, having ascertain your income, savings, credit exposure, repayment (which falls within 33.3% of your monthly income) and documentation. It is advisable to start your search for property that falls within your income and repayment ability. Property search can be done via property agents, property magazines, internet, mortgage bank websites etc.
Contact a Mortgage bank: This is the push stage where it is essential for you to contact a mortgage bank for further information on the facility you are looking at.