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Understanding Mortgage Loan

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Home is arguably one of the single biggest investment most people will make in their lifetime and the moment you decide to travel this road requires you to have all the necessary information.

Price still remains one of the factors that deter most Ghanaians from purchasing a property as most people lack the ability to raise such amounts to acquire their dream homes. Majority of these people tend to seek the help of financial institutions to pay for the property on their behalf and that is what we refer to as a mortgage loan.

A Mortgage Loan is basically an agreement between a bank (lender) and an individual (borrower) whereby the borrower receives a large sum of money (to pay for a property of his/her choice) and pays the lender back in installments over a time period (15 to 20 years). The amount can be taken in cedis or in dollars.

Types of Mortgages


  1.  Home Purchase MortgageThis type of mortgage is available for an individual who is looking to purchase an already built property (usually from an estate developer) for the purpose of accommodations. This type comes in two forms:


a.     First Time Buyer

This is for an individual looking to purchase their first home but has major difficulty in raising the required minimum deposit/down payment (usually 20% of the house price). The individual can apply for a 100% mortgage to help pay for the property in full.

b.     Buy To Let

The buy-to-let mortgage is designed for homeowners willing to purchase another property for the purpose of renting it out to tenants.


2.     Homeowner’s Mortgage

The homeowner’s mortgage differs from the buy-to-let mortgage. This is for homeowners willing to use their property as collateral to access a loan on a long term basis. This is usually referred to as equity release; it enables you to use the value of your existing property to acquire a loan and using the cash release for a variety of purposes including even buying a new home.



3.     Home Improvement Mortgage

Homeowners with plans of renovating or expanding their property can apply for a home improvement mortgage.





Loan Application Requirements

There are basic things required for every applicant when applying for a mortgage.

1.     2 forms of identity (passport, license, etc.)

2.     2 recent passport pictures

3.     3 months’ recent pay slips/other sources of income

4.     3 months’ recent bank statements

5.     Proof of address (2 different utility bills or tenancy agreements etc)

6.     A credit report if you are a non-resident Ghanaian or foreigner

7.     Offer Letter from vendor[/text_dd][/column_dd][/section_dd]