Saving up to buy your own house may seem like a daunting thing to do. Especially with the current situation in Nigeria with the raging inflation and soaring real estate prices. However, there are clever ways to fund your home through savings.
This article will discuss key tips and ways to save for a house in Nigeria. From budgeting and cutting expenses to finding alternative funding sources, we will cover everything you need to know to make your dream of owning a house a reality.
Whether you’re a first-time homebuyer or looking to upgrade, this guide will provide valuable information to help you on your journey to homeownership.
Key Takeaway (A Quick Summary)
Some of the few steps you can take to save for a house in Nigeria are to determine the total cost by researching the real estate market, getting pre-approval for a mortgage loan, and considering additional expenses.
Taking more disciplined steps, such as cutting back on luxuries and automating savings, can free up funds for a down payment.
Remember, it’s a process that may require patience and time to plan and budget.
Why You Should Consider Buying Your Own House
Owning a house in Nigeria symbolizes stability and security and comes with various financial and personal benefits.
One of the main benefits of owning your own house in Nigeria is the potential for long-term appreciation. Real estate prices in Nigeria have been rising in recent years, and buying a home now can be a smart financial move. As the value of the property increases, so does the equity you have in it, which can be used for future investments or to secure loans.
Another benefit of owning a house is creating a personal space and a sense of home. Renting a house or apartment can be restrictive, as you may not be able to change the property or decorate it as you wish. Owning your home means making it your own and creating a comfortable and inviting space for yourself and your family.
Additionally, owning a house can also provide a sense of security and stability, especially for families. Moving frequently with children is difficult, and owning a home can give them a sense of permanence and continuity.
While owning a house in Nigeria can be a significant financial commitment, the benefits of owning your home can far outweigh the costs. With the right planning, budgeting and discipline, it is possible to make your dream of owning a house a reality.
How Much Should I Save Before Buying A House?
The least amount you need to save to buy a house in Nigeria will vary depending on several factors, such as the price of the apartment, location, and the financing you plan to use.
However, saving at least a 20% down payment is generally recommended. It’s a widely accepted standard that can help to lower your monthly mortgage payments and reduce the overall cost of the loan. For example, if you want to purchase a house worth NGN 20 million, a 20% down payment of NGN 4 million would be required.
However, remember that the down payment is often not the only cost associated with buying a house. Other expenses, such as closing costs, legal fees, and home inspection fees, should also be considered when estimating your budget.
Additionally, there may be a need to budget for repairs and maintenance, especially if you’re buying an older house. An excellent idea would be emergency fund savings in case of unexpected costs.
How To Fund Your Own House: Quick Tips
Here are some useful tips that can help you save the necessary funds to buy your own house in Nigeria:
- Determine How Much You Need
There are several factors to consider when determining how much you need to buy a house in Nigeria, including the price of the house, closing costs, legal fees, and home inspection fees. Here are some steps you can take to determine the total cost of buying a house in Nigeria:
- Research The Real Estate Market:
Look at prices for homes in the area where you want to buy. This strategy will give you an idea of the average price for a home in your desired location.
- Get Pre-Approval For A Mortgage Loan:
Contact a bank or other financial institution to determine how much you can borrow for a mortgage loan. Doing this will give you an idea of how much you will need to come up with for a down payment and closing costs.
- Consider Additional Charges:
Remember that additional costs are associated with buying a house, such as legal fees, home inspection fees, and other closing costs. These fees can add up quickly, so factoring them into your budget is essential.
- Determine The Total Cost:
Add up the price of the house, closing costs, legal fees, and any other costs associated with buying a home. The total would be how much you will need to buy a home.
- Plan For Contingencies:
Keep in mind that unexpected expenses such as repairs or maintenance may arise. Having enough savings to cover at least the first year of these expenses is important.
- Get A Professional Appraisal:
Consider getting a professional assessment of the house you want to buy. It will give you a clear idea of the property’s market value and help you negotiate a fair price.
- Make a Downpayment
Today, many public and private real estate developers allow individuals to take partial ownership after paying a percentage of the total cost. Therefore, one way to do this is to save up the first percentage and pay the rest as stipulated by the developer- monthly or yearly until you make the full payment.
- Cut the Luxuries
Cutting back on luxuries when trying to save to buy a house involves following a few steps.
- Create a Budget: First, you’ll need to create a budget to track your expenses so you know where exactly your money is going.
- Analyze Your Expenses Regularly: With a budget, you can more easily analyse and prioritize your expenses to reduce unnecessary costs.
- Choose Alternative Ways for Fun: Consider some expensive but unnecessary things you do for fun. You’ll save a lot by eliminating some subscription services, being mindful of your spending habits, and looking for cheaper alternative ways to enjoy yourself.
Cutting luxuries efficiently requires a lot of discipline and determination. You’re probably already used to a particular way of life and certain luxuries; cutting back on them won’t be easy, but doing this will be vital towards reaching your savings goals.
- Automate Your Savings
Automating your savings is a great way to ensure you consistently set aside money to buy a house. It removes the need for willpower to commit to setting aside some funds each month for your goal of purchasing a home.
Here are some steps you can take to automate your savings:
- Set up automatic transfers: One of the easiest ways to automate your savings is to set up automatic transfers from your checking account to your savings account. You can do this through online banking or by visiting your bank. You can set the transfers to happen on a specific day of the month, such as the day you get paid.
- Use a savings or budgeting app: Various savings and budgeting apps such as PiggyVest and Cowrywise can help you track your spending, set savings targets, and automate them. These apps allow you to set up automatic transfers to a designated savings account.
- Don’t Rush
It’s important not to rush when trying to save to buy a house because it allows for proper planning and avoiding overspending, bad decisions, and unnecessary stress. Take the time to plan and budget different research options, and ensure that you make the right decision for yourself and your family. By being patient and saving, you can ensure you have enough money to cover all the expenses of buying a house and make an informed decision.
- Get a Cheaper Place
Resisting the urge to splurge when buying a new house can have several benefits. These benefits include affordability, lower maintenance costs, the potential for appreciation, building equity, and saving.
It’s important to weigh the pros and cons of buying a cheaper place and consider how it fits your financial goals. Research the area, check for potential issues or risks and ensure that the house meets your needs and preferences.
- Save Less for Retirement
Reducing your retirement savings is one of the ways to free up more money to put towards a down payment on a house. Depending on your financial situation, this strategy might require you to delay your retirement by a few years.
While this strategy can help you save the required funds for a house, it also comes with trade-offs and risks. Reducing your retirement savings may mean you will have less money saved. Also, delaying retirement may mean you will have fewer years to enjoy your retirement.
It’s crucial to weigh the pros and cons and consider how it will affect your financial well-being and retirement goals.
- Trim Routine Expenses
Reducing routine expenses such as utilities, groceries, transportation, personal care, entertainment, shopping, and debt payments can open extra cash to help you buy a house faster.
- Get Your Debt Under Control
High debt levels can also lead to financial stress, making it difficult to focus on saving for a house. By controlling your debt, you can reduce financial stress and feel more in control of your finances.
It’s important to create a plan to pay off your debt and stick to it. By prioritising debt repayment, you’ll be able to build an emergency fund, free extra money, and achieve your goal of buying a house faster with less stress.
- Consider Downsizing
Downsizing can help you save more to fund a house by lowering housing and maintenance costs. It may require sacrifices and adjustments, but downsizing can help you buy a home faster without any financial burden.
- Reduce Or Cut Out A Bad Habit
Reducing or cutting out bad spending habits can help save more to fund a house. It allows you to increase your savings, better budget, and build an emergency fund, among other benefits.
All it takes is to be mindful of your spending habits and identify which are detrimental to your financial life. Once you’ve identified these bad spending habits, create a plan to eliminate them and stick to them. This plan will help you reach your goal of buying a house faster and with less stress.
- Ask for Gift Money
Asking for money gifts to fund a house can be a viable option. Still, it’s important to consider other people’s feelings, respect their ability to give and accept rejection. It’s also important to remember that additional options are available to help fund a house, such as saving and investing.
- Get a Side Hustle
Starting a side hustle would help you earn extra income, increase your regular savings capacity, and give you more options when considering which house to buy.
Securing a Mortgage in Nigeria
Another alternative to securing your home at a more comfortable pace is to secure a mortgage.
A mortgage offers flexible home financing plans that make it easier to achieve your dream of owning a home. This way, you can pay some percentage as a first deposit and subsequently make monthly payments or yearly at some profit until it’s complete.
However, some requirements must be met to qualify for a mortgage in Nigeria. These include:
- A verifiable means of earning with a minimum monthly income depends on the mortgage solution.
- An excellent credit score
- Your first deposit
- The value of the house you want to be financed
The Process
- Save a Deposit
If you’re looking to buy a home with a mortgage, you need to remember that you’ll be required to pay a certain percentage of the total cost as the initial deposit. Therefore, you need to find out the deposit costs and save that.
- Seek out Home Financing Schemes
Several home financing options are ready to make payment easier in Nigeria. You may prefer state-owned like the National Housing Fund or primary mortgage institutions like FBN Mortgage, Standard Chartered, star credits etc.
Research and review interest rates, loan tenures, required equity contribution percentages, and customer experience to choose your best for these institutions.
- Find Your Ideal Home
You can now set out in search of a property that you can afford. Not every home can be bought with a mortgage. Therefore, we’ll advise that you also take advantage of your mortgage institution by seeking professional advice.
- Tender All Required Documents
Several documents will be requested to prove that you’re qualified for a mortgage loan and can match their payment requirements. This usually varies depending on the institution, but it could include
- a 6 – 12 months bank statement
- Photocopy of title documents
- Copy of payslips for previous months
- Proof of regular income tax payment
- Employment letter
- Work ID
- Birth certificate etc.
- Obtain a Mortgage Loan
With all the necessary documents tendered, you can now initiate the process of obtaining the mortgage loan. You’ll tender your initial deposit, receive structure for the remaining payments and begin signing the required documents for your newly purchased home.
However, it’s critical to note that essential to note that securing mortgage loans outside of commercial cities like Abuja, Lagos, and PortHarcourt may prove quite challenging.
FAQs
How Can I Save for a House Quickly?
Saving for a house faster requires discipline, focus, and determination. You can reach your goal more quickly by prioritizing saving, cutting back on expenses, increasing income, controlling your debt, automating your savings, and consulting a financial advisor.
Can I Buy a House with No Down Payment?
Buying a house in Nigeria with no down payment is possible, but it may be more challenging and come with certain restrictions and conditions. Options such as government programs, rent-to-own, owner financing, a co-signer, and no/low down payment mortgages are available. Still, they may have higher interest rates and stricter credit requirements.
Ensure you know all terms and conditions before buying a house with no down payment. Consult a financial advisor and real estate agent for personalized advice and guidance.
How Much Money Should I Have Saved for a Down Payment?
The recommended down payment on a house is 20% of the total purchase price.
When Should I Start Saving for a House?
It’s generally a good idea to start saving for a house as soon as possible. The earlier you start saving, the more time your money has to grow and compound, which can help you reach your goal faster.
How Do I Solve the High Cost of Living to Save for a House?
A high cost of living can make it difficult to save for a house, but there are several strategies you can use to reduce your expenses and free up more money to put toward your goal.
These strategies include creating a budget, reducing housing expenses, trimming routine expenses, cutting back on transportation costs, shopping around for better deals, reducing debt, increasing income, and being mindful of spending habits.
Conclusion
Ultimately, you can save to buy your home in Nigeria with the right discipline. The key is to set a savings goal, create a budget, and stick to it.
There are many ways to save for a house, and finding the best strategies is important. You can purchase a house by cutting back on expenses, increasing income, getting your debt under control, automating your savings, and being mindful of your spending habits.
Remember to be patient, persistent, and disciplined in your saving efforts. With a clear plan, determination, and focus, you can reach your dream of owning your own house.
