Financing Options in Nigerian Real Estate
Know financing that works for you.
Senovix Team
9/1/20252 min read
Introduction
Before acquiring any property, an important factor to consider for any professional agency or brokerage firm is the way the deal will be financed. Several considerations come to play – the type of property, the reason for acquiring the property, the clients financial situation and the available options in the market. It is important for the buyer to understand the financing options at their disposal, and figure out which best suits them. The major financing options used in Nigeria are discussed below.
1. Outright Purchase
An outright payment as the name suggests, refers to a situation where the buyer/investor pays for the property cash. There are no initial deposits or future payments. This is one of the most common and highly preferred modes of financing property transactions in Nigeria. It has less hassles because it is immediate, fast and straightforward.
2. Bank Loans/Mortgages
These require an initial deposit or down-payment, while the remainder of the purchase price is split across a certain period of time at a certain interest rate. The rules of a mortgage are strict and non-compliance can result in forfeiture. While commercial banks are usually responsible for the bulk of these transactions, it is also important to state that the National Housing Fund (NHF) managed by the Federal Mortgage Bank of Nigeria (FMBN) girants affordable housing loans to citizens. This method is now common among property developers, who market installment plans to the public.
3. Cooperative Societies
A lot of associations now run internal housing schemes with low interest rates pooled from member contributions.
Other emerging financing options include Pension Fund for Mortgage and Rent-to-Own schemes.
Conclusion
Acquiring property can feel like a lot of financial responsibility. This becomes even moreso in Nigeria where there isn't a solid credit system. Notwithstanding, there is a property investment at every price point - you just need the right experts to find them.
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