It is a piece of good news for informal sector operators in Nigeria as the federal mortgage bank of Nigeria (FMBN) has revamped its Cooperative Housing Development Loan (CHDL) product as a channel for delivering houses to this class of Nigerians.
The revamping of this product, according to officials of the apex mortgage bank, is in line with the decision of the federal ministry of works and housing to adopt co-operative societies as the channel for housing delivery to Nigerians, especially those in the informal sector who are encouraged by the ministry to form themselves into co-operatives.
This product which was packaged and launched a few years ago as ‘Informal Sector Co-operative Housing Scheme’ was aimed at bringing the informal sector of the economy into the mortgage net to enable them own homes through mortgage loans.
The key features of the product include tenors of up to 24 months with a moratorium of 12months and interest rate of 10 percent. Up to N500million is accessible by qualified cooperative societies.
“CHDL enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members. The parcel of land should have title in the name of the society which would act as the facilitator on behalf of its members and in the loan transaction. This will also facilitate construction of the housing units,” explained Bola Ogunshola, who was a director, Loans Production/Securities Issuance and Market Development at the time when the product was launched.
He added that “to qualify for this loan, the cooperative society must have been in existence for a minimum of 12 months; the proposed estate must have good title that can be sub-leased to individual allottees/ purchasers of the housing units therein, and the tenor for the loan shall be 24 months with a moratorium period of 12 months at an interest rate of 10 percent.”
The Minister of Housing at the time, Ama Pepple, disclosed that the product was designed specifically with the informal sector operators in mind to enable them to have access to cheap, reliable and affordable funds, with more relaxed condition for access.
With the revamping of this product, Ahmed Dangiwa, FMBN’s managing director and chief executive officer, hopes that more Nigerians in this sector of the economy will have access to housing and that will lead to narrowing the housing deficit in Nigeria estimated at 20 million units.
Besides CHDL, the apex mortgage bank also has other products through which it increases affordability and eases access to housing by low income workers in the country. One of such products is the individual Home Construction Loan which enables NHF contributors with unencumbered land, appropriate land titles and approved building plans to undertake self-construction.
This product offers up to N15million to National Housing Fund (NHF) subscribers at 7 percent interest rate per annum with up to 30-year payment tenors depending on borrower’s age and number of years left in service.
Another product is the FMBN Rent-To-Own which allows beneficiaries to move into the bank’s property as a tenant and pay towards ownership of the property in monthly or annual installments over 30 years at an interest rate of 9 percent.
Yet another product is the home renovation loan that provides up to N1 million for home improvement. “In the past three years, about 43,000 Nigerians have benefitted from this facility,” Dangiwa disclosed.
