TAKING A MORTGAGE IN GHANA!
This thread will focus on a general overview of mortgages (with specific examples relating to Ghana), tips when considering one and why you should take a mortgage if you can afford it.
Kindly RT and follow for more tips! 👊🏽
#Thread
This thread will focus on a general overview of mortgages (with specific examples relating to Ghana), tips when considering one and why you should take a mortgage if you can afford it.
Kindly RT and follow for more tips! 👊🏽
#Thread
A mortgage in simple terms is the arrangement where a bank/lending institution lends you funds at an agreed interest rate to buy or build a property(land, building). The property is used as collateral until you have fully paid up.
If you default, the bank/lending institution can repossess the property, and sell it to defray the outstanding loan balance.
The interest rates charged by the banks on the mortgage amount lent usually varies and per my research is lower for Government workers [ranges between 11-13% p.a] Commercial rates are between 22-28%p.a. Some banks as part of their staff incentives offer mortgages b/n 5-6%.p.a
There are different types of mortgage schemes available on the Ghanaian market including but not limited to: *Purchase Mortgage* Construction Mortgage* Home Improvement mortgage* Home Owners Mortgage* Land Purchase Mortgage* (I will write an article on these various types later)
The duration for most mortgages is 5-15yrs; with a maximum of 20yrs. However, the duration is affected by your number of years to your 60th birthday. For instance,if you’re 55yrs at the time of application, the maximum duration your mortgage repayment can travel is 5yrs.
Some banks require a minimum deposit of 10-20% of the value of the mortgage you’re taking and the bank pays up the remaining 80% to the real estate firm while other types have zero deposit requirement. Some mortgages are pegged at either the US dollar or Ghana cedi.
Repayments usually follow a fixed monthly installment. The repayment amount which is a factor of your duration and the value of the mortgage is usually not allowed to be more than 50% of your net income(Interest to Income-ITI).
Most institutions prefer 40-45%. Your existing ITI from other loan repayments is included in your overall ITI.
THE GHANAIAN HOUSING AND MORTGAGE SITUATION
(Using an ITI of 45%)
(Using an ITI of 45%)
A government salaried worker earning GHS 2,500 monthly can get a mortgage loan up to GHS 93,700 at an interest rate of 12% p.a. The monthly deduction would be approximately GHS 1,125 over a 15 year period.
On the other hand, an entrepreneur or a private person earning the same monthly income of GHS 2,500 can get a mortgage loan of GHS 59,000 using a commercial interest rate of 22% over the same 15 year period. His monthly deduction (ghs 1,125) would be same as a government worker.
Meanwhile prices of houses in Ghana especially Accra are ridiculously expensive and often quoted in US Dollars. How would an average income earner afford this? Story for another day...
I will upload an excel sheet on my website to assist you determine how much you can take as mortgage based on your income. Link will be at the end of the thread.
Some documents you will require when taking a mortgage include a 3-6months bank statements, credit report, IDs etc.
Some documents you will require when taking a mortgage include a 3-6months bank statements, credit report, IDs etc.
5 REASONS FOR TAKING A MORTGAGE NOW
1. - With the rising property prices, mortgages helps to acquire/build a property NOW rather than later (future) where it’s very likely to be more expensive. Remember prices are sticky downwards.
1. - With the rising property prices, mortgages helps to acquire/build a property NOW rather than later (future) where it’s very likely to be more expensive. Remember prices are sticky downwards.
2. It Provides a lump sum to build a property faster rather than using your own funds
3. Property & land appreciate in value. Worst case scenario will be the bank repossessing the property if you’re unable to pay in the future. You may even get excess proceeds from the sale.
3. Property & land appreciate in value. Worst case scenario will be the bank repossessing the property if you’re unable to pay in the future. You may even get excess proceeds from the sale.
4. Monthly repayments are a better option than using your own lump sum. You can invest your money and use the returns to service the loan. “Eating your cake and having it”
5. Your interest to income ratio will drop further as your salary increases in the future making the monthly payments less significant.
Helpful Tips When Looking at a mortgage:
1. When taking a mortgage loan to buy or build a house, take an amount you can afford the monthly payments based on your current income and financial situation rather than using the future. Nothing is guaranteed in life.
1. When taking a mortgage loan to buy or build a house, take an amount you can afford the monthly payments based on your current income and financial situation rather than using the future. Nothing is guaranteed in life.
3. Explore as many options as possible. Various banks offer different rates and services.
4.The future value of your mortgage is affected by the location, land size, facilities in the building. Think carefully about where you choose to build!
4.The future value of your mortgage is affected by the location, land size, facilities in the building. Think carefully about where you choose to build!
5. Look for a TRUSTED real estate agency who would not run away with your deposit or can’t complete the building meanwhile the bank is deducting their monthly payments.
Some institutions which offer good mortgages that i know of are GHL Bank(now acquired by FNB), Stanbic & Republic Bank.
Thanks for reading and sharing! Feedback is welcome. I will share the link to the excel file on my website soon. In the interim you can find more interesting articles on my website
desmondbredu.com
Don’t forget to hit the follow button! Gracias!🙏🏽
desmondbredu.com
Don’t forget to hit the follow button! Gracias!🙏🏽
Since you’re here, kindly check out this thread too
Here’s a link to all the threads I have posted on Twitter. Enjoy reading and RT & follow me for more tips.
