Once you graduate from school and start working, family and friends will often advise you to save money and build. They tell you to buy land; no matter how far away it is, those locations will all develop with time. Once more, they’ll encourage you to keep some cash each month, spend it to purchase sand and cement, and hire masons to make blocks; before you know it, you’ll have enough cement blocks to begin building your structure.
I suppose that’s good advice if you’re not qualified for a home loan.
To avoid the stress of building in a developing location, I would prefer that you contact a bank to help you purchase a property if you verify and are qualified. This is because real estate firms have a greater ability to handle stress and any risk-related difficulties. These risk factors include managing all legal matters, dealing with litigation issues both before and after the structure is built, and having the capacity to designate structures more effectively.
Getting a mortgage from a bank is more convenient since the bank will cover almost the total cost of the building up front, allowing you to inhabit it while you repay the debt over time.
With the help of banks that offer mortgages, anyone between the ages of 21 and 55 who is gainfully employed or self-employed may now easily buy their first property. If you take, let’s say, 15 years to pay off this first facility, you may then take out a mortgage on another property before you retire.
Do your due diligence and familiarise yourself with the fine print provided by the many institutions offering mortgage loans, though. Try comparing rates, getting appropriate advice, looking over the risk considerations, and apply as soon as you’re convinced.
While building on your own is definitely feasible, it may also be frustrating. However, if you can have the luxury of navigating the procedure with ease, why put yourself through stress?
But, in the event that the person is ineligible for whatever reason—perhaps due to a lack of steady income or not within the acceptable age bracket—they can save and develop these facilities piecemeal.
What is a bank mortgage?
It simply means purchasing a property or borrowing money against the value of an existing home.
Types of mortgage in Ghana
Home purchase
A property can be purchased outright by people or businesses for either personal or rental usage.
Equity release
This mortgage lets you release equity from your current home and increase your liquidity so you may make improvements or build a new one.
Home improvement
If you wish to renovate or remodel your house, you must choose this financing option.
Home completion
This financing option is better suitable if you want assistance to finish your current construction.
Requirements
The basic requirements include:
- Completion of forms with your bank.
- Confirmation of your income and employment from your employer.
- Offer letter from the real estate developer.
- Down payment of at least 20 percent of the total cost of the property besides other supplementary information which will be demanded by the Lender.
- Depending on the bank, self-employed applicants will be made to furnish their lender with:
- Last 3 years audited accounts or at least 3 years copies of the applicant’s income tax returns
- 6 months bank statements, etc.
Staff benefits
It is interesting that certain employee groups whose company provides mortgage perks grudgingly express interest in them. Some people give considerable thoughts about these facilities and apply, while others don’t seem interested. These loans, which are staff loans, have interest rates that are lower than the market rates.
While some institutions guarantee or pay part of the interest for their employees, some of them choose to develop independently.
Perhaps, I should learn more about some of the factors that go into their choice.
Could I venture a guess?
- Is it that these individual staff have short-term plans for their employer?
- Are they bequeathed with properties?
- Do they want to save money to buy or build their own homes?
- Are they Sceptical because of the difficult economic conditions?
All the afore-mentioned arguments, in my opinion, are compelling; but let’s not forget that opportunities only present themselves once. Homes increase in value with time, particularly those in metropolitan areas. For investment purposes, you can utilise the new one even if you already own one. There are significant advantages. What if our long-term strategy doesn’t work out as we had hoped?
Nevertheless, some employees of the same institutions who are not yet eligible for these facilities yearn for just such an opportunity. “Wanti Wanti — No Get” and “Geti Geti — No Want”, as we say in the street.
For various reasons, some businesses have not even thought of or have no intention of offering their employees such incentives.
Conversely, some staff members have taken advantage of these benefits and have either finished servicing their first mortgage and have picked up an additional mortgage.
I recall having this mindset of avoiding taking out loans when I started working. My goal was to raise and save money on my own. Regretfully, I discovered that despite my best efforts, I had returned to ‘square one’ due to the numerous demands placed on me from various quarters. Saving, although good, is difficult because of the inflationary pressures and exchange rate volatility that has plagued our nation for years.
So, I rather got loans to purchase some important, pressing needs and took my time to take care of other family obligations. As the family request keeps coming, you plan well so that your immediate needs and that of the family are met in a well-coordinated manner.
Some self-employed and other employees who meet the requirements for mortgage loans but whose companies do not offer these perks have benefitted from these facilities and are now comfortably residing in their own houses. Some of these mortgage houses are beautifully planned, situated in gated communities with many amenities to provide comfort for you and your loved ones. Although these categories of employees pay relatively high-interest rates, they keep pressing on.
Besides, some financial institutions have launched a housing mortgage programme that lets workers use their tier-2, tier-3 or personal pension plans to obtain 100 percent affordable home loans for building, buying or finishing their dream homes. This offers workers a convenient and beneficial approach to become homeowners.
Planning
Utilising such opportunities boils down to planning. Find out how much you can qualify for based on your income and other financial factors. Take into account the location to potentially avoid incurring additional fuel expenses.
Furthermore, banks provide loans at varying interest rates. To minimise cost, carefully go over all the fine details, including pre-disbursement fees, monthly payments, tenor, insurance, etc.
The interest rate plays a crucial role in increasing the size of your mortgage loan. The higher the interest rates, the higher the monthly mortgage payment and possibly the longer the tenor of the loan.
Perform all of this analysis or obtain all the advice necessary to assist you in coming to a wise conclusion.
Benefits of mortgage loan
The majority of these estate homes are expertly constructed architectural buildings situated in developed communities, well-planned neighbourhoods with excellent roads; peaceful surroundings and gated neighbourhoods with round-the-clock protection. Some include additional features such as a basketball courts, kids’ play area, fitness centres, schools and football pitches, among others. This adds to the atmosphere and enhances the social life of the people who live in these structures.
Investments can be made with the property. One type of mortgage that is available to homeowners who want to purchase another property with the intention of renting it out to tenants is called a buy-to-let mortgage. Additionally, the property can be used for Airbnb services, which might bring in significantly higher earnings.
An equity release mortgage facility is a product that enables homeowners to access the equity (cash) locked up in their homes.
After that, the money might be invested in a business, used to purchase another house, etc.
Conclusion
Although everybody would love to stay in a serene environment and enjoy a comfortable life, there is the issue of affordability that has always scared people away. Obviously, a good number of real estate companies provide all the luxury, security, serenity and other beautiful amenities; nonetheless, the question of price needs to be checked.
There should be a deliberate policy on the side of the government to support these firms, as well as proper collaboration with the financial institutions to help bring down their overheads. This, when done, I believe will eventually trickle down to make housing very affordable for the average person.
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