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How to effectively transition from renting to owning a house

How to effectively transition from renting to owning a house

“Owning a home is a keystone of wealth — both financial affluence and emotional security.” – Suze Orman

 

Putting a roof over your family’s head is one of the most important things to do and if you’re like most Nigerians, you’re probably renting and you’re probably looking to transition from renting to owning a house. The most ideal way to provide shelter is to own your home because renting is basically making use of space for a specified time period.

There are cases where renting is ideal but if you intend on settling in a state or a particular location for at least five years, then buying your own home is a better and in the long-run a cheaper deal. The primary reason for this is, houses generally appreciate in value with time while money spent on rents can’t be recovered or attract any value appreciation.

 

Here are a few tips to help you shift from renting to owning a home:

  1. Keep a leech on your savings

One of the main reason most people don’t own homes is, they’re unable to afford it. There’s really no beating around the bush when it comes to buying a house, if you can’t pay a down payment, your finances are probably not stable enough to own a home. However, your financial state is never permanent. Through discipline to save more or seeking extra ways of earning more money, you can buy your dream home.

Here are a few tips to get you started:

  • Set precise saving goals.
  • Take note of all expenses including the seemingly minute ones.
  • Take up extra work to earn more.
  • Consider cutting down on the amount you currently spend on rent. For a family looking to buy a house, renting a relatively cheaper house would help save extra cash needed for your down payment.

 

nigerians-in-diaspora

 

  1. Keep Your mind on your Long-Term vision

Thinking long-term helps you make better decisions as most of your energy would be directed at attaining your end results. While you save towards your goal, devote your time into making all the necessary decisions to help you choose which house to buy. Keep in mind the following:

Choose your location carefully. It’s always better to move to a developing area rather than a declining or saturated area. The reason is, a developing area offers better economic opportunities and would likely attract high-value appreciation compared to an area that has reached its peak. A good example of this is, deciding to buy a house in Surulere or Sangotedo. All things being constant, a house in Sangotedo is more likely to attract higher value appreciation than a house at Surulere. The rule of thumb is, when purchasing a home, access its profitability suppose you resell it in a couple of years.

In addition, consider other long-term issues like schools available in the area, hospitals, shopping centres, location in relation to traffic, all these would help you assess how convenient it would be for your family down the line.

 

Read more: What you need to know about mortgage systems in Nigeria

 

  1. Budget for additional Total Expenses

A down payment or monthly mortgage payment isn’t the only things you’d need to consider when buying a house. Buying a house is committing yourself to cater for extra expenses like renovations, maintenance, insurance, taxes and utility bills.

In order not to end up overwhelmed with bills, ensure you make room for extra expenses.

Rule-of-thumb: Assume that you’ll spend 1% of your purchase price annually on maintenance.

Why? Your house has a lot of moving parts and unlike renting, where you can call the landlord, you’re your own landlord. Of course, this is just an estimate. How much you’d really spend on maintenance and bills depend on factors like; how much you consume in terms of utility rates, climate, age and the condition of the property.

 

  1. Renting is much more expensive than buying a home

In the long-run, the total cost of renting would likely be significantly higher than buying or even mortgaging. In Lagos, for instance where housing prices are high, the cost of renting for five years or even less than can be used as a down payment for a house (depending on the neighbourhood).

Quick tip: calculate how much it would cost to pay a monthly mortgage on the average home in the neighbourhood of your choice in comparison to your current rent payments.

Of course, the best option will be to purchase outright if you’re financially capable rather than spread payment, as that in itself attracts some amount of interest. Buying upfront also helps you make substantial profits suppose you turn around and decide to sell the property.

 

 

Since you’re here …

We’ve got the best deal for you. Buying a house is a huge decision to make. There’s a lot to choose from and a lot of uncertainties and paperwork, not to mention they cost m. Let’s narrow it down for you. Rosewood Residences located in the heart of the Lekki Peninsula encapsulates all it takes to give you a home. We’ve aligned all the factors necessary to give you the type of comfort and luxurious lifestyle you deserve:

  • A home located within the urban area of Lekki
  • 24/7 electricity and water supply
  • Ample, underground parking space
  • A valid C of O

What’s more, we’ve got all these for you at the most affordable price possible. Call in today at 0908123456409095757575. Send us an email at info@sevicpdc.com and let us give you the investment of a lifetime. So, why should you bother calling us today? …Because we understand what Home means to you.

You can also chat with us on WhatsApp: 09095757575 09081234564

Also read: What makes LekkiVale Estate stand out from other estates

Mortgage

Mortgage

Buying a home for your family is one of the benchmarks for success in our society. What makes buying a home harder is usually the lump sum required and the lack of knowledge of how the mortgage system works in Nigeria. Cost is the single biggest factor for the low house purchases among middle-income earners, as they would need to save for long periods to have enough money for an upfront payment. This’s where mortgages act as a better subsidy.

A mortgage lender loans a good part of the cost required to pay for a house, which you will have to pay back with interest over an agreed period of time. On the flip side, if for unforeseen circumstance reasons you’re unable to pay the mortgage bank when due, your home can be taken through a process called foreclosure.

The mortgage system is typically favourable for homeowners who don’t have sufficient cash on hand to pay for a house upfront. However, taking up a mortgage typically takes you a step closer to home ownership compared to perhaps, renting.

 

mortgage-in-nigeria

 

There are different types of mortgage loans and depending on what plan best suits your budget and the amount of payment period, you should carefully assess which is best before opting for one. Mortgage loans are characterised by their time span, usually from 5 to 20 years in Nigeria.

 

Before opting for a mortgage loan, ensure you understand the following factors:

  • Consider your budget and monthly income. It’s preferable to have a relatively stable source of income. This is to prevent overstretching yourself to keep up repayments.
  • Keep in mind other than the cost of the owning a home, you’d need to cater to additional expenses like household bills, utility bills, insurance and maintenance.
  • Mortgage lenders will usually request to see proof of your bank statement to assess your income flow and expenses, and if you have any debts. This assessment is simply to prove you can keep up with repayments plus interest rates.
  • The mortgage lender can decide to refuse to offer you a mortgage if they think you can’t afford to keep up with repayments.

How Does The Process Work?

When compared to regular loans, mortgages typically have lower interest rates. Typical mortgage interest rates in Nigeria range between 7-25%. The lender requires the potential buyer to have a certain percentage of the total amount needed for the purchase available, called equity. This percentage should range between 30-70% of the total cost of the home. Ideally, your mortgage payments shouldn’t require above 25-30% of your monthly income to enable stay afloat with other bills and engagements.

As mentioned above, the length of time required to pay back the loan is important. In most cases, the maximum period of time given is 20 years.

 

Read more: What it takes to turn your house into a Home 

 

What Documents Do You Need?

The documents needed to get your mortgage loan to approve vary from institution to institution. They include the following:

  • A comprehensive statement of account (12 months or more)
  • Employment and confirmation letter (if employed)
  • Certificate of Incorporation of business (if in business)
  • Nationally accepted means of identification
  • Utility bills
  • Application form (provided by mortgage institution)
  • Original title deed of property (To confirm that property is not in contest)

In Nigeria, taking mortgage loans is increasingly becoming popular and it’s one of the surest ways to owning your own home. However, before considering a mortgage, keep in mind the following questions:

  • Is this the right time for me to buy a house?
  • What kind of property do I need? And where?
  • Do I need to take out a mortgage?
  • Can I truly afford to buy a house on a mortgage?
  • How much do I want to borrow and for how long?
  • What are the pros and cons of taking out a mortgage compared to renting?

Also read: How to effectively transition from renting to owning a house

 

 

Since you’re here …

We’ve got the best deal for you. Buying a house is a huge decision to make. There’s a lot to choose from and a lot of uncertainties and paperwork, not to mention they cost more. Let’s narrow it down for you. LekkiVale Estate located in the heart of the Lekki Peninsula encapsulates all it takes to give you a home. We’ve aligned all the factors necessary to give you the type of comfort and luxurious lifestyle you deserve:

  • A home located within the urban area of Lekki
  • 24/7 electricity and water supply
  • Ample parking space
  • A valid C of O

What’s more, we’ve got all these for you at the most affordable price possible. Call in today at 0908123456409095757575. Send us an email at info@sevicpdc.com and let us give you the investment of a lifetime. So, why should you bother calling us today? …Because we understand what Home means to you.

You can also chat with us on WhatsApp: 09095757575 09081234564

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