Mortgage Homes In Ghana – Everything you need to know.
A mortgage is a loan that is applied for by individuals who lack the adequate amount of capital needed to purchase a property or individuals who choose to avoid paying for the property with outright cash. In Ghana, mortgages are available to both Ghanaians and non-Ghanaians. Individuals can request mortgages from institutions such as Ecobank, Calbank, Stanbic bank, GHL( Ghana Home Loans), and HFC bank.
There are various aspects of a mortgage an individual has to view before obtaining it: such as the type of mortgage the person wants, the requirements needed to obtain it, and the terms that come with a said mortgage.
Types of Mortgages in Ghana
Firstly there is a home purchase mortgage. This type of mortgage is for individuals or companies that want to buy properties to either rent or use for their own personal use.
Another type of mortgage is a home equity mortgage. It is when individuals perform equity release, which is basically selling the rights of their property to another entity while still being able to use the said property. On a later date, individuals will have to repay the debt.
Home completion mortgage is a type of mortgage that is targeted towards people that want or need money to complete the construction of their property.
The final type of mortgage is the home improvement mortgage. This mortgage is made for people who want a loan in-order to either refurbish or expand their property.
Mortgage Requirements in Ghana
You’ll need to provide a couple of documents to apply for a mortgage in Ghana. In-order to apply for a mortgage, the individual needs to have a valid form of ID such as a passport or the Ghana card.
The person applying for the loan should not have a history of bad debts, this can be proven by providing the institution which the person is soliciting a loan for with a bank statement.
Individuals will be required to have insurance in-order to protect the property, preferably from the same insurance company that is used by the financial institution from which the individual is getting their loan.
Applicants applying for the loan usually have to be between ages18-55, but this can vary depending on where the person is applying for the mortgage.
When applying for the loan, individuals have to prove that they will be financially capable of paying back the loan. This means showing proof of employment and showing proof of income. The mortgage repayment scheme should be at least 40% of the individuals’ net income.
Lastly, people that apply for the loan should be able to make a down payment and also put up adequate security incase they default on their loan payment.
Mortgage terms in Ghana
Mortgages usually take an interest rate of between 10%-13% when the loan is given in dollars but 30%-36% when it is given in cedis.
Most financial institutions that offer mortgages usually place a requisite of 15%-20% as a down payment, they then sponsor the rest of the mortgage until repayment is made.
The common consensus among most of the financial institutions is that mortgages should have a repayment period of about 15 years.
A mortgage appraisal will be carried out by an independent surveyor in-order to get an unbiased estimate of the property on which the mortgage will be carried out.
Mortgage Companies in Ghana
According to Investopedia, a mortgage company is a firm engaged in the business of originating and/or funding mortgages for residential or commercial use. In Ghana, there are few real mortgage companies but numerous quasi-mortgage companies, some of the notable mortgage companies in Ghana are GHL (Ghana Home Loans), Republic Bank, and Stanbic Bank.
GHL
Ghana Home Loans is a mortgage finance institution that has been around since 2006. They are the longest-running mortgage company in the country with over 12 years of experience. They offer various mortgage services such as: purchase mortgage, construction mortgage, homeowners mortgage, 100% purchase mortgage, land purchase mortgage, home improvement mortgage, quick cash mortgage, mortgage refinance, home completions and save to own mortgage.
● PM: There are two types of this mortgage. There is purchase mortgage for first time buyers, and there is purchase mortgage for applicants who already own a property but want to get another property for the purpose of renting. Both these mortgages share similar features such as having a repayment duration of 15 years when requesting the loan in dollars and 10 years when in cedis. They both offer up to 80% of the property value in loans at a maximum of 1.6 million cedis.
● CM: This type of mortgage is to help applicants who own a plot of land and want to develop it. The payback period is between 10 to 15 years, and loan is no more than 40% of the individual’s net income; the repayment will be made in fixed monthly deposits.
● HOM: This mortgage is for homeowners who wish to use their home as collateral in-order to solicit a cash loan. Per usual the payback duration for this is 15 years for dollar payment and 10 years for cedis payment. Homeowners can get up to 60% of their property’s value( maximum of 1.6 million cedis). Applicants are also eligible for insurance that covers the mortgage.
● 100% PM: This mortgage is for applicants that can not raise the minimum required amount of 20% of the property’s value as a deposit in-order to get the loan. This mortgage requires no deposit at all. The payback duration is up to 15 years. The fixed monthly repayments should be no more than 40% of the loanee’s income. Loanees have the choice of either purchasing from a private vendor or a real estate agency.
● LPM: This mortgage package is for applicants who want a loan in-order to purchase a plot of land for residential purposes.
The payback duration or time frame for this mortgage is between 3 to 5 years. GHL will loan the applicant up to 80% of the land’s value. As usual the fixed monthly repayments should be no more the 40% of the applicant’s net income.
● HIM: This is mortgage is aimed at applicants that want funds in-order to improve their property. Duration of repayment is between 3 to 5 years and the fixed monthly repayments should not exceed 40% of the applicant’s net income. The mortgage may not exceed 60% of the property’s value.
● QCM: This mortgage tailored for self-employed or salaried applicants that need funds to settle personal or business needs, except for repaying other debts. Applicants also have to have a track record of repaying their debts in a short period of time. The features of this mortgage is that it has a repayment duration of up to 2 years. The fixed monthly repayments should not exceed 40% of the applicant’s net income, and the loan should not exceed 60% of the property’s value.
● MR: Applicants can transfer their mortgages from a financial institution to GHL. GHL will pay-off the applicant’s existing debt in-order to collect the mortgage. The repayment duration is 10 to 15 years and as usual, the fixed monthly repayment scheme should not exceed 40% of the applicant’s net income.
● HCM: This mortgage is for applicants that have an incomplete property and need funds in-order complete it. The repayment duration is between 10 to 15 years. As usual, the fixed monthly repayment scheme should not exceed 40% of the individual’s net income.
● STO: This mortgage is suited for applicants who do not have a steady flow of income but still wish to own a home. They will be able to do so with a Save-To-Own account. Applicants can choose to save in either cedis, pound sterling, or US dollars. They can earn tiered interest depending on their account balance. They can make regular payments for 12 to 14 months in-order to be eligible for a mortgage.
Mortgage Companies in Ghana
Republic Bank
The Republic Bank of Ghana formerly known as HFC Bank is a subordinate financial institution of Republic Financial Holdings Limited of Trinidad and Tobago. Republic Bank of Ghana offers similar mortgage packages to GHL such as home purchase mortgage, home equity mortgage, home completions mortgage, and home improvement mortgage. Republic Bank differ from GHL when it comes to public sector home scheme mortgage, and employer assisted loan scheme mortgage.
● HPM: Home purchase mortgage for Republic Bank has a minimum down downpayment of 20%. The maximum payback period is 20 years and the amount of the loan allowed to the loanee is dependant on their credit score. Ghanaians are not subject to a facility fee but foreigners are subject to a facility fee equivalent to 1% of the requested loan. The process fee for citizens is 1.5% of the mortgage value while it is $250 US for foreigners.
● HEM:Home equity mortgage is for individuals who own property but need liquid funds in-order to invest in other projects. The maximum repayment period is 15 years, and the process and facility fees are similar to the HPM. The maximum loan allowed is 80% of the properties value.
● HCM: Home completion mortgage is a mortgage suited for applicants that need assistance in completing their property. The maximum loan given to applicants is subject to their credit score. applicants must add a minimum contribution of 50% of the cost of construction and the property must have reached lintel level. The maximum payback period is 15 years and processing and facility fees are the same as HPM and HEM.
● HIM: Home improvement mortgage is suited for applicants that need aid in undertaking renovations or extensions on their property. The maximum loan given for this is 50% of the property’s value and it should not exceed the threshold of $45,000 US. The maximum payback period is 15 years and the process and facility fees are the same as the other mortgage packages.
● PSHS: In 2007, the government of Ghana ordered Republic Bank to provide a reasonably priced homeownership scheme under the guise of the Public Sector Home Scheme. All the applicants would undergo vetting under the Republic Bank’s criteria. The properties that qualified under this scheme must; have had the basic infrastructure, should have been within a 40km radius of Accra/Tema, Kumasi, Sekondi, Takoradi. This facility could only be used once in a lifetime.
● EALS: The Employee Assisted Loan Scheme is a loan arrangement between the bank and an employee. This scheme is meant to aid employees in purchasing land, paying school fees, rent advance and medical bills. The minimum loan amount is 500 cedis and the maximum is 15,000 cedis. The payback period is up to 24 months. Applicants can top up if; they pay 1/3 of the existing loan, their salary increases after 6 months, or if their salary passes through republic bank.
Stanbic Bank
Stanbic bank has been operating in Ghana for over a decade now and has been the recipient of awards from the Ghana Investment Promotion Centre such as; the Top Performing business, Best Financial Institution and Best Bank in Ghana. Stanbic Bank offers a variety of loan options that include home purchase, developer construction, home improvement, equity release, and refinancing.
● HP: This mortgage is utilized for the purpose of purchasing a completed property. Stanbic Bank offers up to 80% of the property’s value as loans in the Greater Accra region and 70% in Kumasi and Takoradi. The maximum payback period is 20 years. The maximum amount loaned is dependant on the applicant’s net income.
● DC: Developer Construction is a type of mortgage in which Stanbic allows applicants to purchase uncompleted properties from the bank’s preferred developers. The same terms that apply to home purchase also apply here.
● HI: This loan suited for applicants who want to expand or refurbish their property. Stanbic offers a loan that covers up to 80% of the pro-forma invoices. Repayments of the mortgage will be made in monthly installments.
● ER: Equity release allows applicants to get funds by selling part of their property for a loan. Stanbic Bank offers a loan of up to 70% of the property’s value in the Greater Accra Region, and 60% in Kumasi.
● R: Stanbic offer a versatile range of refinancing options. There is internal refinancing that allows loanees to change the terms of their loan such as the repayment period or the currency that the loan is being paid in. There is external financing in which Stanbic takes over the debt of a loanee from another financial institution.Lastly, there is cash- out refinance, which allows loanees to liquidate some of the value of their property if the property has appreciated. Stanbic finances 70% of the property’s value when its located in the Greater Accra region, and 60% when it is located in Kumasi.
Reference: GHL, Mortgage loans, https://www.ghlbank.com/mortgage-loans/
Republic Bank, Mortgage Finance, https://www.republicghana.com/products/mortgage/#.Xc1vDC2cY9d
Stanbic Bank, Stanbic Home Loans, https://www.stanbicbank.com.gh/Ghana/personal/Borrowing/Stanbic-Home-Loans
Affordable Homes in Ghana | Cheap Apartments for rent in Accra
References:
Royal Palm Estates, Mortgage Requirements, https://www.royalestatesgroup.com/online_application/mortgageRequirements.html
Meqasa, 4 Basic Steps to Acquiring a Mortgage Loan in Ghana, https://meqasa.com/blog/4-basic-steps-acquiring-mortgage-ghana/
O. A Kwao, Mortgage in Ghana, https://www.westfieldsrealestate.com/news/mortgage-in-ghana/
