The Property Show: Eseosa John Ekhaguere on Provision of Affordable Housing

Our Special Guest on Week 7 of The Property Show was Mr. Eseosa John Ekhaguere, Head of Property Finance of Stanbic IBTC Home Loans and the theme of the show was Provision of Affordable Housing, the Role of Mortgage House.

Click here to listen to a studio record of the show or continue reading for a quick summary.

A mortgage loan is a debt instrument used by individuals and businesses to make real estate purchases without paying for the entire value of the purchase upfront. The security for the loan is always the asset, that is the property that is being financed. The payback period is usually over a long term anything from 5 to 20 years. However, it could be more than 20 years in Nigeria and not exceeding 60 years for the age of the purchaser.

Contrary to misleading assumptions that mortgaging is a cumbersome process, all a client needs is a historical cash flow that is not less than 12 months. Also, the only collateral needed is the Title of the property the bank is purchasing on the clients behalf. The title will be held by the bank for the duration of mortgage tenure. Mortgaging has no restrictions in term of location, what matter is for property to be clean.

The first requirement is to show complete interest in mortgage financing. There are two classes of person considered for Mortgaging; the salaried employee and the non- salaried employee. The salaried employee will require at least twelve months bank statement and evidence that they work in that organization i.e. pay slips and typical standard requirement.

As for the non- salaried employee, the same requirement of bank statement is required but duration of payment is a lot shorter compared to a salaried employee. While a salaried employee has up to 20 years of payment, a non- salaried employee is limited to 7 to 10 years.

Many people believe that mortgages are for rich people, but this is only a myth. Anybody can access mortgaging. However, what is important to any lending institution is that you must have a cash flow that will support your payment. There is a scientific basis for determining interest rate required of clients on a monthly basis. For instance, some banks expect a monthly payment that will not exceed 35% to 40% of your monthly income. Hence, if you earn a N100, 000 monthly, your interest service should not be beyond N35, 000 to N40, 000. Any lending institution will consider your interest per income ratio and with the value of the asset you want to buy.

The major function of the bank is to provide financing and the bank does not involve itself with the searching and procurement of properties on clients’ behalf. Asides from financing, the banks also conduct due diligence to ascertain that the Title is clean. Thus, the bank only has its liability limited to the statutory due diligence function it has been compelled by law to perform.

The Interest rate is more like the typical bank charges. For mortgaging it is a monthly rate paid back to the bank for housing loans collected. Mortgage rates depend on the risk in transaction, how much equity that is put upfront in a transaction determines the applicable interest rate for you.

There is a possibility that you may want to buy a property that is worth N2million or N3 million. If  you want to pay over twenty years, then your interest service could be N15, 000 to N18, 000 if your monthly salary is N50, 000. A client is advised using a mortgage calculator so that they know the interest rate they can afford to pay as interest servicing.

The Nigerian Mortgage Refinance Company (NMRC) is a financial institution established to provide short time liquidity and medium to long time findings or guarantee to mortgage loan originators. The objective of the NMRC is to support mortgage originators such as primary mortgage and commercial banks.

Essentially, what they are doing is that they provide more liquidity in the market for these institutions to be able to create more mortgages.

About Mr. Ekhaguere Eseosa John
Mr. Ekhaguere Eseosa graduated with a Second Class Upper in Economics and a Master’s degree in International Real Estate Markets from the University of Aberdeen, Scotland and University of Hong Kong. He also has a certificate in Hotel Real Estate Investment and Asset Management from the Cornell University, New York.

He has 13 years Financial Services experience and has tremendous skills in Business Development, Credit Analysis, Project Management & Real Estate Finance. He is an Associate of the Chartered Pension Institute and an Associate member of the Royal Institute of Chartered Surveyors (RICS).

Mr. Ekhaguere is widely traveled and has visited and reviewed some very remarkable Real Estate Projects in Europe, Asia and North America such as: Two International Finance Centre in Hong Kong, The Roppongi Hill Urban Renewal Project in Tokyo, Japan, The Canada’s National (CN) Tower in Toronto, Canada, Jin Mao Building, Shanghai, The CCTV Headquarters in Beijing, China, Marina Bay Business & Financial Centre, Singapore, One Raffles Quay Project, Singapore, The Expo Parque in Lisbon, Portugal amongst others.

Mr. Ekhaguere currently works in the Property Finance Group of Stanbic IBTC Bank Plc where he oversees Property Finance transactions from the Personal & Business Banking divisions of the bank across Nigeria.

About The Property Show
The Property Show is a weekly real estate radio show with www.privateproperty.com.ng which airs live every Tuesday at 5PM on Inspiration 92.3FM and is hosted by popular OAP Ms. Wana Udobang (Ms. Wana Wana) as host.

The Property Show comprises a 15-minutes interview with a Special Guest that will enlighten listeners on selected real estate topics and issues. Also, there is a 15-minutes phone in segment that enables listeners of the show make enquiries and receive expert advice from a pool of real estate experts and professionals.

Join us next week for another interesting show.