The natural disposition of many people in this part of the world when they hear mortgage financing is dismissive because to them, it is a high-end facility, which is the preserve of a certain class of people. As complex as it has been made to look, a mortgage is simply taking a conventional loan to finance a home purchase, home building or home remodeling.
Qualification for a mortgage is quite basic. Every working Ghanaian that earns an income of a sort is eligible for a mortgage. So long as an individual earns a stable and consistent income that can be used to service the loan, she/he qualifies for a mortgage. The only caveat to this, however, is that at the end of the month when the deduction is made, the individual must have enough left to see her/him through the rest of the month. What this means is that the amount of mortgage one gets is dependent on your income level.
What is critical is affordability. You must be able to afford servicing your mortgage without having to bend over. Your ability to repay the loan is the major consideration the bank or lending institution will make before granting the facility and as such, you must be sure that you can afford the mortgage before applying for it. Another important thing potential home owners must consider is their age. The bank or lending institution will take a critical look at the age of the applicant in order to compute the remaining number of years to retirement and the amount the applicant has to pay. This is because the facility will be tied to the number of years to retirement in the case of salaried employees.
Also, banks and lending institutions like to look at credit histories through a request to credit bureaus to make the borrower’s credit file available. This allows them to make a more informed decision regarding mortgage prequalification. Through the credit report, lenders acquire the borrower’s credit score, which represents the statistical summary of data contained within the credit report. It includes bill payment history and the number of outstanding debts in comparison to the borrower’s income.
The higher the borrower’s credit score, the easier it is to obtain a loan or to pre-qualify for a mortgage. If the borrower routinely pays loans late or default, then a lower credit score is expected. A lower score may persuade the lender to reject the application, require a large down payment, or assess a high interest rate in order to reduce the risk they are taking on the borrower. Many people have issues on their credit report which they are unaware of. The first step in determining if you have any outstanding issues is to get a copy of your credit report or assess your own credit worthiness before you approach a bank or a lending institution.
Moreover, as a matter of practice, some lending institutions will require potential home owners to have a transactional relationship with them or even pick your history from whichever bank or institution you transact business with for your financial history. For some banks in Ghana, you will need to bank with them for a period before they can grant a mortgage facility. For others, such as Stanbic Bank, they will only pick history from your current banker, six months bank statements, and treat you as an existing customer.
Acquiring a mortgage can be a very easy and simple process depending on the lending institution. It is very important to tick all the boxes before you embark on the journey of acquiring a mortgage facility. But as always, when in doubt, it is important to speak to an expert for guidance and direction.
By Wendy Nelly Sarpong
The writer is the Head for Specialised Lending at Stanbic Bank