To begin with, if you are not aware that mortgage banks exist in Nigeria, and they carry out the functions of mortgage banks anywhere, then you might want to do some reading and catch up. It might just leave you as surprised as it did me – there are in fact dozens of financial institutions across the country offering mortgage financing and related services. I can see your eyebrows reflexively furrowing in doubt as you read this, so I did some more research and came up with a list of the functions carried out typically by mortgage banks in Nigeria. Here are these functions:
1. To encourage and catalyse housing delivery across NigeriaÂ
A key point in the mission statement of the
Federal Mortgage Bank of Nigeria (FMBN) is that growth of primary mortgage institutions must be encouraged to speed up housing delivery in all parts of Nigeria. To this end, the FMBN serves as a risk guarantor, freeing up several private
lenders to provide mortgage services without significantly jeopardizing their
financial position or raising their risk exposure.
Federal Mortgage Bank of Nigeria (FMBN) is that growth of primary mortgage institutions must be encouraged to speed up housing delivery in all parts of Nigeria. To this end, the FMBN serves as a risk guarantor, freeing up several private
lenders to provide mortgage services without significantly jeopardizing their
financial position or raising their risk exposure.
2. To encourage local and foreign investors to build a stake in the Nigerian housing sectorÂ
A key part of the strategy employed by many Nigerian mortgage lenders is to mobilise funds from investors within and outside the country for investment in the
housing finance space. This makes it easier for them to invest (and thus give out more mortgages), while the investors rarely get their fingers burnt because of the sheer need for housing and available market across the country.
housing finance space. This makes it easier for them to invest (and thus give out more mortgages), while the investors rarely get their fingers burnt because of the sheer need for housing and available market across the country.
3. To deliver mortgage financing for provision of affordable residential houses around the country
A mortgage is only useful if there exists the real possibility of paying it off – in other words, if it is not affordable, then it is pointless. To this end, mortgage banks in Nigeria are mandated to make sure than a good proportion of the financing they offer goes toward provision of affordable housing, as against just doing the dictates of the market, which can be weighted toward whatever will bring the quickest and highest return.
4. To provide loans for the purpose of erecting, purchasing or renovating housesÂ
You can get a mortgage finance facility for buying a property, or for building your dream home from scratch, or even simply remodeling or renovating an existing home to suit your needs.
5. Catalyse house financing among low and medium income bracket of the population, including the non-salaried and usually informal sector
Unlike many other types of financing in Nigeria which are heavy on specific types of acceptable employment, and thus often exclude the informal and/or unbanked
sector, mortgage financing in Nigeria is specifically directed at ensuring inclusiveness of different types and levels of employment.
sector, mortgage financing in Nigeria is specifically directed at ensuring inclusiveness of different types and levels of employment.