As part of its efforts to address the housing challenges of Nigerians, the Federal Mortgage Bank of Nigeria (FMBN), recently came up with a policy, FMBN Home Renovation Loan (FHRL) which it believes will give Nigerians an opportunity to access mortgage loans for the renovation or improvement of their existing homes.
Designed for Nigerians who are contributors to the National Housing Fund (NHF), it proposes to approve and disburse the loans through the Federal Government Staff Housing Loans Board (FGSHLB) for federal civil servants and through the Office of the Head of Service, or any other body recognised by the Bank at the state level in the case of state civil servants and those in the private sector.
By the provisions of the policy, successful applicants, who are expected to accompany their applications with certified bill of quantities indicating the amount required for the renovation, will be entitled to a maximum loan of N1million which is subject to the income limit of the beneficiary as well as the ultimate cost of renovation.
According to the proposal, the approved loan has a tenor of three years and repayment within the same period through monthly deductions and will be disbursed in lump sum to the Loans Board for federal civil servants and directly to the account of beneficiaries in the case of state civil servants and employees of the organised private sector after acceptance of offer and the fulfilment of conditions. A key aspect of the loan is that monthly repayment must not exceed 33.3 per cent of applicant’s monthly salary/income on an interest rate of eight percent for the duration of the loan. This is because of the high risks involved as well as the less cumbersome process and documentation required.
For purposes of security, the applicant is expected, among other conditions, to provide a letter of undertaking from the relevant head of his or her organisation. The applicant will also take out a Reducing Term Assurance Policy (RTAP) which guarantees the outstanding loan and covers death, incapacitation and loss of job.
We share the optimism of the managing director of the bank, Mr Gimba Yau Kumo, that this home renovation loan scheme will increase contributors’ access to the benefits of the NHF scheme and improve the standard of living of beneficiaries among other advantages. We expect it to spur more Nigerians to contribute to the scheme which, it is our hope, will ameliorate the pressure on the regular NHF loan, increase staff productivity, especially state officers that will be involved in processing the loans and pursuing their repayment, and, at the same time, enable FMBN to reach out to a larger number of contributors with less resources.
It is our opinion that the success of this scheme will require the cooperation of all stakeholders and a sincerity of purpose in order to achieve all the intended outcomes.
