Plan To Own A House - Addo-Kufuor Advises Youth
5/12/2012 9:03:46 AM -
The Chief Operating Officer of Ghana Home Loans Company Ltd, Mr Kojo Addo-Kufuor, has encouraged young people not to be intimidated by mortgages but rather educate themselves on it and fashion out how they can use it to own homes.
He cautioned the youth to prioritise their expenditure, avoid unnecessary purchases, and save diligently towards the down payment that is required to access a mortgage.
“My candid advice to young people is to make home ownership their undisputed priority ahead of land purchase, cars, expensive clothing, and even lavish weddings, all of which can be acquired later on in life. It is all about careful planning and prioritisation,” Mr Addo-Kufuor told the GRAPHIC BUSINESS in an interview.
He specifically cautioned the youth against entering into land purchase agreements without the necessary legal advice since it often resulted in financial loss and invariably delayed the individual’s ability to purchase a home.
Commenting on the inability of many Ghanaians, particularly the youth, to own houses long before their retirement mainly due to the minimum requirements for mortgages, he admitted the reality was that not everyone could own a house at today’s prices.
He, however, challenged the idea that mortgages were the preserve of high income earners and saying through financial arrangements such as mortgages offered by companies such as Ghana Home Loans, a wide range of salaried and self-employed people had successfully joined the property-owning class.
Mr Addo-Kufuor added that Ghana Home Loans clients include bankers, doctors, police officers, junior nurses, prison wardens, teachers, traders, self employed business people, and journalists all of whom had been able to purchase homes because they earned the minimum GH¢600 a month or above.
To qualify for a mortgage, Ghana Home Loans requires the buyer to contribute a minimum 20 per cent towards the transaction and use no more than 40 per cent of their monthly income to service the monthly repayment. Loan repayments are spread over a 20 year period with an option to prepay, making it the longest dated personal loan in Ghana presently.
Mr Addo-Kufuor also observed that another hindrance to homeownership was the preference by some people for house types well beyond their affordability threshold, noting “some young people decide to delay their home purchase until they can afford their dream home” and warned that it was a risky and expensive strategy which could result in the individual going to retirement without their own house.
“Anybody who earns GH¢600 either as an individual or as joint applicants should consider borrowing the minimum US$10,000 mortgage facility and get on the property ladder, even at the bottom with a modest One-bedroom unit. They can then work their way up towards their dream home wherever that may be,” Mr Addo-Kufuor advised.
Asked if the Company had attained its objective, he said only when the very young person entering the world of work thought of homeownership and immediately applies for a Ghana Home Loans mortgage, only then we would they be satisfied.
The Chief Operating Officer also mentioned that the Equity Release Mortgage and Home Completion Mortgage were two products that the company was still keen to educate the market about since they offered tremendous value to the borrower.
On the issue of land title, Mr Addo-Kufuor advised anybody looking to buy to seek legal advice from a lawyer with a track record in land transactions, explaining that difficulties associated with land title verification as well as protracted litigation had rendered a lot of the property in Ghana unsuitable to be used as mortgage collateral.
He disclosed that potentially Ghana’s mortgage portfolio should be 10 per cent of the total domestic productivity (GDP), an amount equivalent to between US$2 billion and US$3 billion.
“If this was realised, capital infusion of US$2 billion to US$3 billion will literally be injected into the economy with the corresponding benefit to all sectors,” Mr Addo-Kufuor said, adding however that the total residential mortgage pool is currently under US$200 million, which is unacceptable for a country with a middle-income status.”
Ghana Home Loans commenced operations in 2006 and focuses exclusively on the provision of residential mortgage finance for prospective homeowners. It provides a full range of mortgage products, including First Time Buyers, Home Improvement, Home Completion, and Home Construction and Equity Release.