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Published On: Tue, Oct 28th, 2014

Counting the cost of affordable housing for low income earners

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Access to affordable housing in Nigeria has continued to be a matter of formal and even informal discuss, Evelyn Okakwu acceses the major prerequiste for housing loans, as stipulatede by the Federal Government for low income earners.

By Evelyn Okakwu

All over Nigeria, access to affordable housing has continued to be a matter of formal and even informal discuss.

While the possibility of accessing affordable houses seam like a dream to the lower class of the Nigerian society; the Federal Government has said a lot can be done if people make the most use of the schemes created for that purpose.

The Federal Mortgage Bank of Nigeria in collaboration with Primary Mortgage institutions, (PMIs) recently indicated its criteria for accessing the National Housing Fund, (NHF) to assist the lower class of the society.

According to the director of loan setup and pay off, Otunba Olumide Osude; “The NHF scheme is for Nigerians in all sectors of the economy, particularly those within the low and medium income levels who cannot afford commercial housing loans, such as civil servants, traders, artisans, commercial drivers etc. Any intending beneficiary must be registered contributor and up to date with his/her contributions.

A beneficiary must have at least 6 months contributions, in which the pass book of the contributor is remitted to the FMBN, through the contributor’s employer”, he added.

Regarding the amount of contribution necessary for eligibility; Osude said; “2.5% of monthly basic salary contribution will qualify you to access the loan. The pool of funds created by the contributors nationwide becomes available to any contributor to borrow from, after contributing for a minimum of six months”.

Osude who noted that the contributors are to apply through PMIs said, however that the amount of loans accessible by each contributor depended on his or her income level.

This self-employed trader at the Utako Market, Jonah Yohanah has this to say: “The NHF loan is easier to access by civil servants because many things have already been put in place for that purpose. But for

people like me who are unable to meet up with some of the rules and regulations regarding want of evidence for our businesses and its income, the access to the loan is like a dream to us. I must tell you

that I have not tried accessing the loan. But a friend of mine did;some of this so called PMIs make it very difficult for us, my friend said he has been contributing for about 2 years, but when it comes to accessing loans, he is made to wait unti8ll various details are verified. They said they needed to be sure of his level of income, at least annually, and other details. It is even okay to say that, but like I told you, there are lots of bottle necks.”

But every contributor should have a bank detail indicating his current payment detail: “Yes that is what they say, but my friend said he had problems accessing the loan, I don’t even know if he has been able to get the loan at the moment. All I know is that he has once discussed his ordeal with me, and I tell you it’s not easy. Then they say you must have already gotten a land. But tell me how can a petty trader

like me get a land, and a certificate of occupancy, without such a loan. It’s very difficult I tell you”.

Mr Osude explains this situation; “No. the loan amount is determined by the applicant’s affordability. This entails his/her income level that will enable repayment of the loan.

The contributor, or beneficiary, as the case may be; is expected to have made and equity contribution or personal stake of 30%, 20% or 10% depending on the loan amount applied for. You know that the NHF loans are repaid on monthly installation from the monthly income of the beneficiary. So if the Beneficiary is given too much, it could affect his or her during the payment period.

The purpose is for convenience. The property can be located anywhere as long as it is within Nigeria.

The applicant must however provide acceptable title documents to the land.

Another source of concern is the source of collateral for the loans; the FMBN official however says there are no additional items required as collateral “The only collateral is the property in question. No any other collateral is needed to secure the NHF loan”.

Following the directive of the Federal Government to ensure that people do not abuse the scheme, NHF loan has been stipulated to be a once in a life time affair to comply with the policy of “one man one house”, as indicated during the 2014 ministerial platform by the Minister of Lands housing and Urban development, Akon Eyakenyi.

According to Mr Osude, “A contributor is eligible to access a maximum loan amount of N15million repayable over a maximum period of 30 years at an affordable interest rate of 6%.

Although the loans cannot be used to purchase the lands, as lands are expected to have already been accessed, prior to the collection of the loans, the FMBN says the scheme is aimed at ensuring that Nigerians within the lower class who really desire an affordable accommodation are able to access such.

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