From Diaspora to Homeowner

We all know the story. You moved abroad to build a better life for yourself and your family, you start sending some money back home so that your close friend or family member can build you a decent home for when you move back. 15-25 years you move back and not a single thing has been done, the trusted friend has swindled you.

Sadly this happens more often than not. When money is on the table, it exposes a different side of people. It could also happen due to the sheer incompetence of the person in charge of the building project. Building projects tend to be notoriously complicated.

Today we will talk about how you can avoid the issues described above and ensure you have a decent home waiting for you in Nigeria when you decide to come back, either for short-term stays or coming back for good.

Count the cost

As with any complex purchase, the first thing you need to do is figure out how much you would be willing to spend on this and more importantly how much you can afford to spend.

Nobody knows your expenses better than you, but you want to make sure you can afford to fund the housing project.

Build or Buy

Your options are to either buy or build. The option you choose is based on a couple of factors including how much you have available to spend, how much customization you need, your risk appetite and the amount of time you have before you need to move into the home.

Just remember that buying is less risky, but could cost more, while building could cost less but you would be taking on significantly more risk

Financing

You must now determine how you intend to finance the project. It's always a good idea to finance property projects through a mortgage or other form of housing finance unless you have a significantly high net worth and would have no problem dropping the lump sum for the home at one go. And here's why; Building or buying a home tends to be a very capital-intensive investment, it's not usually a great financial decision to tie down upwards of $50,000 even if you have that lying around. A better bet for you would be to take those funds, spend $10,000 - $15,000 on a downpayment and then invest the rest, and use the returns to pay off the mortgage.

Your options for financing are;

1. Gradual building i.e sending money back periodically to finance various stages of the construction process.

2. Diaspora mortgages: Some banks in Nigeria and many banks abroad have a diaspora mortgage program that allows you to access as much as 100 million Naira in housing loans as long as you can prove that you are legally abroad.

3. NHF Diaspora mortgage: While this is just a form of the diaspora mortgage, it's special because your lender in this case is the Federal Government of Nigeria and you are entitled to this loan if you have been a regular contributor to the scheme. You just need to contribute to the scheme for 12 months after which you will be able to access 50 million Naira from the Federal Mortgage Bank of Nigeria (FMBN) for 10 years at between a 6-10% interest rate.

If you decide to buy it's time for you to locate the property you are interested in. The technology around virtual viewings has improved significantly and you can do a full viewing of the property you want without having to be physically present in Nigeria. After deciding on the property you want, you should also have a trusted friend or relative visit the property on your behalf to resolve any outstanding issues you might have.

Obtain an offer letter

You will need to obtain an offer letter from the developer. Don’t worry about this, any developer worth their salt knows exactly how to put these together for you. Once you receive the offer letter, you should immediately draft an acceptance letter addressed to the developer or seller.

The other documents you need to provide will vary depending on the financier but broadly speaking you can expect to be prompted to provide some of the documents below;

• Duly completed mortgage loan application form

• Equity contribution (between 10-30% of the value of the home)

• Minimum of last 12 months' statement of account

• Letter of employment, confirmation, promotion

• Last 6 month’s pay slip stamped by employer

An efficient mortgage bank or financial institution should take between 14-25 business days to provide you with a response to your application.

Closing the deal

From this point onwards the entire deal will shift on almost autopilot. It is at this point the lawyers step in and earn their commissions. Contracts are drafted, the financier will have the property inspected and barring any major deviations from the earlier descriptions of the property provided, they will release the funds to the seller and then hand over the keys to you, while they keep all the documents pertaining to the property until the loan is fully paid off.

In conclusion, you do not need to be scared to take the major step to acquire a home for yourself in Nigeria no matter where you actually live and if you follow the steps listed above, you should be able to move into your home by the time you get to the final step.

At H28 we are building a holistic solution that will enable you to take all these steps within our safe and secure ecosystem. We will hold your hands throughout the homebuying process and ensure you achieve the homebuying goals you set for yourself. If this sounds interesting to you click here to learn more about us, take our affordability assessment and see how much you can afford in a home right now.

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Have a great weekend!