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Construction Loan Lagos Nigeria - Free Home Building Loan Tips

Construction loan Lagos Nigeria. This section provides free tips for obtaining home building loan from mortgage banks and financial institutions in Nigeria.

Construction loan helps you close the financial gap in the execution of your building project. The reality of today's world is that our resources often cannot fund our wants or desires. So, when you decide to build your own home, you may discover that the funds you have cannot cover the cost of your building project.

Obviously, the next natural thing to do would be to find alternative funding sources. The sources that readily come to mind are . . .

Mortgage banks

Commercial banks

Cooperative societies and

Friends and family

Getting a construction loan from a family member or friend is not a very rosy option because the cost of building a home is usually high. And getting a friend or family member to loan you that much money, even half the cost of building a small apartment, will be difficult if not impossible.

Cooperative societies can help to some level depending on the amount of savings you already have with the cooperative society and the limit of borrowing allowed for members for home building loan or any other loan for that matter.

For example, a particular cooperative society in the food beverage industry had the following rules:

1. You can only take a loan equal to the difference between twice your savings and the loan already taken (your debit)

2. You cannot take a loan above three million Naira (upper limit on loans)

The maximum loan amount for a company-based cooperative society is dependent on the company you work for and the wealth of the members (eg. oil company workers with large pay). But whatever the case, there will be a loan limit or upper ceiling on loans and, many times, construction loan requirement will be more than what the cooperative society will be willing to give.

If your home building loan requirement matches what your cooperative society is willing to give, then you don't have a problem because cooperative societies charge a much lower interest on loans than what commercial banks charge.

However, if you need much more than the traditional cooperative society can give, then you have no choice but to deal with the banks.

A few things to remember when signing up with a bank for home building loan.

1. Request a breakdown of the payment plan. This shows your monthly deductions with respect to . . .

Repayment on principal

Interest payment

Amount paid on other charges like management fee etc and

The duration of the loan

This spread sheet shows you your loan repayment plan at a glance. If the loan repayment plan indicates that you're heading for a credit crunch, it is the course of wisdom to consider reviewing downwards the proposed loan amount.

Hey, it's great to own a home. But don't jeopardize your peace of mind in the process.

2. Read the fine lines.

What are the terms of the construction loan? Can you pay off the loan at once if and when you become financially empowered enough to do so? Are you bound to continue to make interest payment if sometime in the future you decide to payoff the loan balance at once?

3. What impact will the size of the loan have on your family finances?

A home loan accelerates the building process and that's what we all want . . . to start living in our own home as soon as possible. But if that loan will give you sleepless nights, reconsider.

A lot of people have jettisoned the idea of taking a loan. Instead, they buy a plot of land for sale and start developing their plot slowly over several years.

Some others support their personal finances with cooperative society loans to add some bite to the building process. Many cooperative society loans come at 9% interest rate. That is a huge bargain compared to 17 - 22% interest rates offered by commercial bank.

So, make your choice. It's your call.

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