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When attempting to get a mortgage to finance a home, all the options can be overwhelming. A joint mortgage can be a great option to consider, especially for first-time home buyers, because it essentially allows you to split a loan with someone else.

Let’s go over the details to help you decide if a joint mortgage loan is a right choice for you.

What Is A Joint Mortgage Loan?

A joint mortgage is shared by multiple parties, typically a home buyer and their friend, partner, or family member. It allows two parties to pool their financial resources and potentially qualify for a bigger or better loan than they could have individually got.

A joint mortgage differs from joint ownership if you’ve heard that term used before. Unlike joint ownership, which sees two parties sharing the ownership of property equally, a joint mortgage has nothing to do with who actually owns the title or deed. With a joint mortgage, two parties are simply both responsible for the loan—even though one of them may not have their name on the actual title and doesn’t technically own the property.

 

How Joint Mortgage Loans Work

When you get a joint mortgage, you share responsibility for the loan with another person, commonly a parent, child, partner, or friend. While joint mortgage applicants are often married, you don’t have to be married to the other party on your loan—you just both have to qualify and be over the age of 18. The factors used to decide whether you qualify for the loan are the same as if you were applying for a loan yourself; your lender will look at the borrower’s credit scores, income, debt, employment history, etc. All parties that will be on the loan have to submit their own application.

If you’re approved, both you and the other party involved will sign a promissory note. You will both be equally responsible for making payments on the loan, though one of you can make the payments on behalf of the pair or group.

Be aware that if someone stops making their share of the payments, the lender can penalize and come after any of the borrowers for the money, since they are all equally responsible.

That said, make sure whoever you decide to share a joint mortgage with must be fully invested in repaying their share of the loan.

 

Credit Score: Whose Score Is Used On A Joint Mortgage?

When you get a joint mortgage, your lender will look at the credit history and credit scores of all applicants that will be on the loan. Since everyone’s credit will affect the loan you qualify for, it can be detrimental if you or the person you’re applying with has a poor credit score.

While some lenders will be more flexible in one borrower having bad credit, others will be less forgiving. If you or your partner’s credit score is making getting a joint mortgage difficult, remember that there are always other options. You may still qualify for joint ownership, which won’t put the borrower with poor credit’s name on the loan but will grant them legal ownership of the property alongside the other borrower(s) involved.

 

Joint Mortgage Requirements

To qualify for a joint mortgage, you’ll need to meet the same criteria as any other borrower would for a loan, which includes a decent credit score and minimal debt. The only difference with a joint mortgage is that the qualifications of both you and the other borrower(s) will be examined rather than just those of one person, which can give an advantage to someone that might get a joint mortgage with a partner that has better credit or significantly higher income.

 

A Joint Mortgage Doesn’t Mean Joint Ownership

As mentioned before, just because both parties are on a loan doesn’t mean they own equal shares of the property. Unless they are joint tenants/have full joint ownership, it’s likely that only one borrower in a joint mortgage has their name on the actual title or deed.

 

How to Get out of a Joint Mortgage

If you get into a joint mortgage that, for any reason, you’re no longer eager to be a part of at any point, it is possible to get out of it. Escaping the legal responsibilities of a joint mortgage typically requires a refinance to remove you or the other borrower(s) from the loan.

Here are a few of your options, should you find yourself in this position.

Get Into Agreement

If you want out of a joint mortgage, the first step you should take is to have an honest talk about the situation with your co-borrower. Since this person is likely family or a friend, it can be difficult, but if the other party understands your intentions and reasoning for dropping out of the loan, they may be more willing to consider refinancing and removing your name. If you all can’t agree to refinance, you likely won’t be able to get out of the loan, so it’s a good idea to approach the issue willing to talk things through.

Make sure to consider the costs to refinance before bringing it to your co-borrower so you can both be informed about what it would cost to remove you from the loan and leave the rest to the other party.

 

Buy-Out Your Partner

If your partner or co-borrower wants out of a joint mortgage, it is possible to buy them out if all parties agree to it. This means you essentially give your partners their share of the equity via a cash-out refinance.

You will need to have some equity built in the home to pull this off successfully, but if it’s an option for you, it can be a way to remove other parties from the loan and refinance to sole ownership.

You’ll need to have your home appraised as well as determine the equity in the home that belongs to each partner. If you can all agree on a buyout price, you can refinance and become the sole owner of the mortgage. Keep in mind that you will also need to qualify individually for your lender’s requirements on the new loan, which can sometimes be difficult if you originally got the loan with multiple partners.

 

Sell the Home

If all parties agree, it’s also an option to just sell the home and move on. Rather than deal with refinancing or having to buy out a co-borrower, selling the home and going separate ways can relieve all parties of the responsibilities of the current joint mortgage loan.

If one or more of your co-borrowers is attached to the home, however, this option may not be workable for you.

 

The Bottom Line

Buying a home with a partner, friend, or family member can be very exciting. Getting a joint mortgage can make homeownership more affordable and more feasible for many people, which makes it a good option for many first-time home buyers. Since two or more people are equally responsible for making payments, however, there are some complications that come with a joint mortgage, particularly if you ever want to get out of it.

One of the pertinent challenges of low to middle-income Nigerians is that of homeownership. Some unconfirmed reports put the current housing deficit at over 17 million. There are several people who are gainfully employed but do not have their own homes. Rather, they are living in rented apartments.

We have realized that some individuals want to access a mortgage loan but do not know how to go about it. Today, we will guide you with simple 10 basic steps to take in order to get a mortgage loan in Nigeria, irrespective of your state of residence.

1. Have a verifiable means of income

The first thing to do if you want to apply for a mortgage loan in Nigeria is to be sure that you have a verifiable means of income. One of the basic pre-requisites that the mortgage Bank would check is to be sure you have a source of income that will guarantee repayment over the loan period without defaults. They would request account statements covering 6-12 months. It is mandatory that a mortgage loan applicant has a verifiable means of income, as mortgage loans are long-term in nature and the Bank would not want to process or approve a loan for an individual who does not have a means of repaying.

2. Possess a good credit report

One thing you need to work on if you want to apply for a mortgage loan is having a good credit rating. No financial institution will give out a loan to an individual with a bad credit rating, if the applicant has taken a loan in lending institutions in the past and defaulted, this will affect the applicant’s credit score.

3. Search for a Property within your Affordability Range

Once you can boast of a verifiable means of income and have a good credit score, the next thing is a search for a property that is within your affordability range. One of the key things you should have in mind when searching for a property is to be sure that the property has a valid title on which a legal mortgage can be created, such as a Certificate of Occupancy, registered Deed of Assignment, etc. The title is a very pertinent one, as a defective title cannot be used to access a facility from a mortgage Bank. It is advisable to seek the advice of your mortgage bank when buying a property.

4. Review the Interest Rate

In Infinity Trust Mortgage Bank Plc, our interest rates are very competitive and we give long tenures which make repayment easy. We can avail of any amount required to buy your desired property as long as your income can accommodate the repayment. Our equity contribution can be as low as 20% and can be paid overtime. Apart from the attractive rate, the customer experience is also remarkable.

Most standard Primary Mortgage Banks in Nigeria have a functional loan calculator on their websites. You may use the loan calculators for an idea of your monthly amortization. It is important to state that the calculator will give you an estimated value, not the exact amount.

5. Save up your Equity

Equity contribution is the amount of money that you can immediately contribute towards the purchase of a property.

Part of the requirements when applying for a mortgage loan in Nigeria is the provision of equity. Mortgage Banks do request for equity contribution between 20-50% of the property’s value depending on the creditworthiness of the applicants or the risk assessment of the candidate’s profile.

So, if you are planning to take a loan to acquire a property, you have to be sure you have some equity contribution. Some of the Primary Mortgage Banks have specialized products to cater to this. Infinity Trust Mortgage Bank, for instance, has a product, Infinity Save and Own a Home that will enable those who do not have the equity contribution readily to save it over a period. This is done in a way that the savings will be structured in line with your earnings to be convenient enough for you.

6. Consider All Other Charges

Before going all out to apply for a mortgage loan to purchase a home, you must also calculate your average monthly spending. The maximum amount that is acceptable for repayment should not exceed 1/3 of your net income. You must consider every other expense as it pertains to getting a mortgage loan like the administrative charges, cost of perfection of legal mortgage, etc. These are some of the other charges that you will be required to pay while applying for a mortgage loan. It will be wise to ask your account or loan officer what charges you will be required to pay. It will not be nice if you get mid-way in the application process before knowing that you will be required to pay some other mandatory fees.

7. Start Collating all the Required Documents

The moment you have decided on applying for a mortgage loan, then you can start with the collation of the required documents that will be requested from you. Some documents that will be requested from you are; a 6-12months’income account statement, an offer letter from a seller or developer i.e the developer in charge of the property you intend to purchase, a copy of the birth certificate or sworn affidavit, a copy of employment letter, copy of work ID, a copy of the title document of the property you intend to purchase, letter of introduction from your employer, etc. These are some documents that they will request you to provide during the application. It will be best if you work on getting these documents ready as soon as you approach the Mortgage Bank for a loan. When these documents are readily available, it makes the application process to be fast.

8. Approach A Primary Mortgage Bank to Apply for the Mortgage Loan

The next thing to do when you have followed all the listed steps above is to approach a Primary Mortgage Bank of your choice based on the research you have conducted. You will be required to open an account and the requirements for opening an account include the provision of 2 passport photographs, a valid means of identity(Driver’s license, National ID card, International passport, or Voter’s card), and a utility bill such as electricity bill, water bill, etc. Upon successful account opening, you are good to begin the mortgage application. Once you strictly follow the steps and requirements listed above, your loan will be processed and in no time, you will become a homeowner.

9. Tighten up your belts

Transitioning from receiving a full monthly salary monthly to the repayment of loans requires a high level of financial discipline. Repayment can take up to 5-10 years or more, depending on your financial capacity. This means that you have to be mentally prepared and make some adjustments in your spending. Taking up this responsibility is going to take a lot of dedication and hard work. But the rewards are tenfold, seeing your family living comfortably and having the fruits of your labor make a dream come true.

10. Being free from debt

Once you have completed paying your mortgage loan, you’ll be able to relax a little more and actually enjoy life. You can think about traveling and doing things you would enjoy. You can take family trips where you could have bonding time together. But of course, to be free from debt, pay your mortgage religiously

 

Now that you know the basic steps needed to apply for a mortgage loan, you can choose our Bank for your mortgage loan application. I am sure you want to ask why you should choose Infinity Trust Mortgage Bank Plc among other Primary Mortgage Banks in Nigeria.

The exciting news is that if your partner with Infinity Trust Mortgage Bank Plc, you will get a trusted Mortgage Bank to guide you every step of the way.

We will:

• Partner with you and provide support throughout your journey to homeownership.
• Guide you on properties that align with your income
• Negotiable and flexible rates and payment structure to suit your specific circumstances.
• Transparent and professional guide.
• Ensure that the property has a registered title document that will relieve you of future stress.
• Guarantee you the exceptional and personalized service you deserve.

Deciding to buy your own house is tough but ends up being the best decision you can make on your journey. It is worth it to have the emotional connection to a home you own, and a sense of stability that renting won’t bring.

It is okay to take a mortgage to acquire your first home. This is better than paying rent unnecessarily because the money used in paying for rent can be utilized as your mortgage contribution. You are sure the payment is for your home and not enriching a landlord somewhere. The good thing about taking the mortgage is the fact that the fund is given to you upon approval and then you can acquire your chosen property, which can be paid for over 15-30 years depending on the age of the applicant and some other considerations.

Here are some benefits of buying your own house than paying rent:

1. Your Net worth Increases

The moment you acquire your home, this automatically boosts your net worth. First, your status changes. In Nigeria, for instance, people give so much respect to homeowners, “landlords” as they are usually called. The respect accorded to you when you are doing very well financially but living in a rented apartment differs from that which is accorded to a homeowner regardless of how small the property is. Owning a home helps you build a valuable asset that is worth more than just a place to live.

Therefore, this is one of the enormous benefits of owning your home against renting an apartment.

2. An Opportunity to Earn Passive Incomes

Taking a mortgage means you are repaying back the loan over a long period. When deciding to buy your house, you can include a small space for a boy’s quarter or mini flat or even a two-bedroom flat depending on the size of the property and your preference. This would be rented out and serve as another passive way of earning income while repaying the house loan. This can be done in a way that the monthly repayment will be totally covered by the rent you are receiving from your tenants.

3. Can’t Be Sold Without Your Consent

If you have rented an apartment in some central cities in Nigeria, then you must have either experienced this directly or heard this happened to someone close to you. Cases of landlords selling off the property without the consent of the tenants, but informing them when the sales have been concluded. If it is not total sales of the property, you see instances of the landlord increasing the rent rate without giving the justification for the increment. These people in cities like Lagos, Ibadan, Abuja, Port Harcourt, and some other cities experience. This, most times, leads to the disagreement between tenants and landlords. If you take a mortgage and purchase your own house, such things will not happen to you. Simply because the property is yours.

4. Ownership of Interior Design and Remodeling

When the house is yours, you can take ownership of the interior design from start to finish. You can decide the look and feel of both your dining area and sitting room to look like. The type of furniture or accessories that you like, etc.

You can do whatever you’d like to the house you own, from full remodels to painting the walls. You’ll have a lot more flexibility in these things, and for many, that’s a seriously appealing part of buying your home.

When you own your home, you’re able to do exactly what you want with it anytime you want with no one telling you you weren’t supposed to make certain changes as you experience in a rented apartment.

5. You Can Choose to Sell Off the Property if the Value Increases

When you purchase a property in a commercial area, there is a high tendency for the property to appreciate in value over the period of some years. Since this is your property, you can decide to sell the house and use the money to offset your loan, while the profit on the sale can be used to acquire another property in a different location. This is solely based on an individual’s choice.

A mortgage can be a necessity if you can’t pay the full cost of a home out of pocket. Sometimes, it makes sense to have a mortgage on your home even though you have the money to pay it off. For example, if you have other investments you want to do, a mortgage provides the flexibility to repay the loan in a long tenor.

The basic requirements for accessing a mortgage facility are as follows;

1. An application letter.
2. An introduction letter from your employer is needed to ensure that you are indeed an employee of the company.
3. Offer letter from the property developer
4. Copy of documents of the property you want to purchase i.e Certificate of Occupancy.
5. You are required to present payslips for the last three months. This is needed in order to verify that you have a steady income and you can afford to repay the loan you are requesting for.
6. Your bank account statement for the last six to twelve months should be presented as well, depending on the requirements of the financier.
7. A means of identification such as an international passport, National ID card, and Driver’s license should be presented.
8. Tax clearance certificate.
9. Letter of employment and confirmation can be used on jobs from jobs of 2years or up to 7years of working experience.
10. An approved building plan should be presented.

Asides from these requirements, any loan facility to be granted always follows three steps which are;

• Account Opening
• Equity Deposit
• Application for the loan
• Assessment
• Processing and approval
• Disbursement

The listed above is very crucial for a lot of reasons because many Nigerians mostly never give into the use of mortgage institutions based on the belief that mortgage institutions are profit-oriented and not customer-oriented, while others are simply afraid of ‘debts.’ Some have ended up getting defrauded, paying wrong parties or buildings on lands involved in a legal tussle or owned by the government. With these in mind, asides from making finances available, mortgage institutions carry out due diligence on the property or land during the process of assessment to find out if the buyer can go ahead with the purchase or otherwise inform the buyer about any trace of ingenuity or doubt to discourage the purchase.

In conclusion, once you have met the above requirements, as well as any other additional necessities based on the mortgage institution of your choice, you can get your dream house with ease.

You have just decided to take a mortgage loan to acquire your dream home? Wow! That sounds like a good decision. However, there are some important mortgage terms that you have to familiarize yourself with which you will come across during the application process. We have just compiled 10 key mortgage terms that you will come across when you finally decide to take a mortgage loan. Below are the key mortgage terms:

1. Appraisal

An appraisal is an activity that the Bank conducts on an intending borrower to assess his income level, net worth, and cash flow in order to ascertain that the individual can repay the mortgage loan. Once an appraisal is completed, the loan amount applied for can either be reduced because of certain considerations, or there would be a request for more collateral or assets in order for the mortgage loan to be approved. The appraisal assures the Bank that they are not loaning you more money than you can repay.

2. Credit Scoring

Credit scoring is done to assess the creditworthiness of an applicant by looking at the personal characteristics; the household, the number of children, age, economic characteristics; such as income level, employment status, cash flow, and the credit score of the applicant, and valuation of the property. The Bank credit scoring is based on the listed factors earlier to check if the applicant is qualified for a mortgage loan.

3. Equity Contribution

Equity contribution is the amount of money that you can immediately contribute towards the purchase of a property. Since most people do not have enough savings to purchase a property outright, the gap between the equity contribution and the house price is financing required. The Bank would require that the applicant provide an equity contribution between 20 -and 30% or more depending on the value of the loan and the risk profile of the applicant.

4. Debt-To-Income (DTI) Ratio

Your DTI is equal to your total fixed, recurring monthly debts divided by your total monthly gross household income. Mortgage Banks look at your DTI when they consider you for a loan to make sure that you have enough money coming in to make your payments. You may have trouble finding a loan if your DTI is too high. Most lenders cater to applicants who have a DTI of 50% or lower.

5. Principal

The principal is the amount of money you borrow when you originally take out your home loan. To calculate your principal, simply subtract your down payment from your home’s ultimate selling price.

Let us assume you buy a home for N 6,000,000 with a 30% down payment. You would put 1,800,000 down on your loan. Your mortgage lender would then cover the cost of the remaining amount on the loan, which is N4,200,000. Since you owe your mortgage lender N 4,200,000, your principal balance would be N 4,200,000.

6. Term/Tenure

Your mortgage term or tenure is the number of years you’ll pay on your loan before you fully own your home. For example, you may take out a mortgage loan with a 10-year term and that means that you’ll make monthly payments on your loan for 10 years before the loan matures.

7. Amortization

Amortization is the process of how payments spread out. When you make a payment on your mortgage, a percentage of your payment goes toward interest and a percentage goes toward your loan principal. At the beginning of your loan, your principal is high and most of your payment goes toward interest. However, you chip away at your principal over time and pay less in interest. An amortization schedule can reflect consistent monthly payments and keep you on track to pay off your loan within the term.

8. Assets

In a mortgage, an asset is anything that you own that has a cash value.

When you apply for a mortgage, your lender will want to verify your assets. This is to ensure that you have enough money in savings and investments to cover your mortgage if you run into a financial emergency.

9. Fixed-Rate Mortgage

A fixed-rate mortgage has the same interest rate throughout the term of the loan. For example, if you buy a home at 4% on a 15-year fixed-rate loan, it means that you’ll pay 4% interest on your loan every month for your entire 15-year term. Most of the time, mortgages created in Nigeria are fixed rates.

10. Title

A title is proof that you own a home. Your title includes a physical description of your property, the names of anyone who owns the property, and any liens on the home. When someone says that they’re “on the title” of a home, it means that they have some kind of legal ownership of the property. Some of the recognizable titles we have in Nigeria are Certificate of occupancy, deed of assignment, deed of lease, deed of sub-lease, land certificate, deed of mortgage, and survey plan.

Knowing the above terms will give an applicant a proper understanding of what to expect during the mortgage application process.

At least, the applicant would not appear like a novice to the account officer who is helping with the completion of the application.