Monday, February 17, 2014

How to Buy, Build or Complete Your Uncompleted House with Mortgage in Ghana

image source:

Owning a property is absolutely one of the greatest investments that one could ever think of making in life. It is indeed a great feat, which not everyone can attain, therefore, individuals who have made efforts to buy or build their own houses are always proud of such achievements; and Ghanaians are no exception.

The people of Ghana pride in property ownership, and would go to any length to acquire at least one. Building a house requires a great deal of money. One needs a whooping sum of not less than $100,000 (GHC 250,971 at the time of writing) to embark on such a process. Such an amount is not easy to come by, and it is proven even harder for the average Ghanaians who do not earn much income. Working on an uncompleted house requires extra funds to put finishing touches to it. These situations make mortgages a much sought after in Ghana.

There are many financial institutions which render mortgage services to people interested in buying, building or completing a house.

Prior to applying for a mortgage, it is important to be well informed about the interest rates these financial institutions charge respectively. Furthermore, it is equally essential to apply for the appropriate loan, as there are different types of mortgages for different uses, and all these come with various interest rates ranging from up to 35%-40% in some cases. (:

Different types of mortgages

  • Should you be interested in building your own dream house, the ‘self-Build Mortgage’ (sBM) is the loan to apply for. For most of the self-build mortgages, the money for each stage is usually only paid out once it has been completed and a valuator has visited the site.

    But, some self-build mortgages release the amount of money required for each stage of the building at the beginning rather than the end of the stage. This is especially useful if you do not have the cash up front to pay your builders or to buy materials.

    Self-Build Mortgages tend to have higher rates than on standard mortgages, and the payment spread within 10-20years.
  • The ‘Home Purchase Mortgage’ (HPM) has been designed purposely for people who intend buying a house. The borrower is made to pay a minimum of 15% deposit, and the loan payment spread between 15-20 years.
  • In case you are looking at completing your uncompleted building, you need the ‘Home Completion Mortgage (HCM). This type of loan has been designed for people who already started the building process but stopped along the way due to financial problems. The uncompleted house could have initially been funded by the owner’s own money, his employer, bank or another mortgage company.

    Loans for this purpose normally do not exceed up to 50% of the total construction cost of the property, and the interest rates vary from bank to bank. The property must have reached the lintel level at least. Borrowers of this type of mortgage have a maximum of 15 years to finish payment. Not everyone can apply for a loan. To qualify for a mortgage, you must first ensure that you are not below18 years (some financial institutions have 21 years as minimum) and secondly, not more than 55 years old. There are other issues that need to be considered as well, should you decide to build, buy or complete an uncompleted house with a mortgage.

  • And to build, buy or complete an uncompleted house with a mortgage, one must:
    1. Mortgage brokers - There is the need for the person to contact a mortgage broker to help them get a better financial institution or bank with the best interest rate. The borrower can also decide to do his own background checks to pick a suitable mortgage company without necessarily consulting the broker. Therefore, conferring with two or three mortgage companies would be ideal for the borrower to ascertain which company is better and has the best rates.
    2. Intended purpose - The mortgage loan which has been acquired for the purpose of building, buying, or completing an uncompleted building must be used for the exact purpose. Some people often use the loans for something else other than the intended purpose, and in the end, they lose. Not using an acquired mortgage for the main purpose can bring problems to the borrower. It could lead to a breach of contract between him and his bankers if they found out that he was using the mortgage for something else than what both parties knew of. In this case, the borrower could even be accused of deception.
    3. Loyalty - There is the need for the borrower to be loyal in his dealings with the mortgage company. Being loyal in this sense includes the importance of the borrower to pay his debt as agreed by both parties (himself and the bankers). The borrower must have a sturdy income, to be assured of his ability to pay his deductions without any unnecessary interruptions. He should be able to provide adequate security for the loan. Paying your debts duly will also help you avoid foreclosure, where the banker will have your property owner reverted to themselves because you are unable to pay back your debts within the given time frame.
    4. Other source of income - To be on the safer side, the borrower must look for other sources of income. This will help him be in good terms with his bankers even if he loses his job someday. One would still be able to pay back the loan when he has alternate sources of income without being harassed by his bankers when the unfortunate happen.
    Despite the relief that acquiring a mortgage for owning a house could bring, the high interest rates charged by the mortgage companies in Ghana is still a bother to Ghanaians, and especially to the average Ghanaians.

    More often than not, borrowers end up paying as much as 400% of the original amount they borrowed and this takes a toll on them as they are faced with over-burdened financial situations. For this reason, not everyone in Ghana can afford to own a house. In the meanwhile, those who cannot afford to build or buy their own houses are compelled to live in rented apartments and other makeshift buildings which have their own consequences.

    The government of Ghana, and the bank of Ghana must as a matter of urgency, intervene on behalf of the people, by putting measures in place to regulate the interest rates to ensure that no one is exploited, in his quest to own a house.

    Monday, February 10, 2014

    6 Steps to Verify Land Ownership in Ghana before Purchase

    Land litigation remains one of the major problems in Ghana. Lately, issues regarding land have been on the increase, and have made most of the headlines. There have been a lot of demolishing exercises carried out; land guards selling and reselling lands to people; flooding, and tidal waves invading lands in areas such as Glefe, a community near Dansoman, and all suburbs in Accra in the Greater Accra Region.

    More often than not, buyers do less investigation to ascertain ownership of the land before purchasing. After thorough investigation, it comes into view that most lands sold out end up being a state acquired lands or for some original owners, but have been sold and re-sold to the poor victims by cunning chiefs and notorious land guards.

    In a country like Ghana, land is a valuable asset – the reason being that they do not diminish or loose its value whichever the situation of the economy.

    In planning to buy a land in Ghana, important steps must be taken to ascertain the ownership before even envisaging doing so.

    Here are 6 practical steps to follow to avoid loosing your hard earned money:
    1. The Ghana Land situation - Please visit the site. It is essential that when you want to purchase a land, you first visit the plot and look out for the land and where it is situated. Find out whether it is near a refuse dump site or it is one itself. You must also check the surroundings to see if it's a desirable area you would want live, and also get to know if it is a water logged area. Usually, most lands in such areas are left likely to belong to government, purposefully left out for future projects.
    2. Ghana Land Social Amenities - A land would be better to acquire or buy if it has the major necessary social amenities, such as – the land being connected to a good road network, electricity from the national grid, pipe-borne or portable water, and sometimes a market. All these are necessities of human life that we cannot live without. Therefore, it is prudent that you have all these facilities around or in the area of the land you want to purchase. Often, the lands in these areas, where there are no facilities, are not demarcated and therefore may not be for sale.
    3. Ghana Land Chiefs and traditional leaders - In Ghana, most land disputes have been said to be caused by some chiefs and traditional leaders, as well as individuals who have self-imposed the name ‘land guards’ on themselves. Some of these chiefs and traditional rulers are in the habit of selling and re-selling lands to people, with mostly the aim of making ‘bad’ money. Many people have been victimised by their behaviours. They have cunning ways of doing this: for instance, if someone buys the land at $13,000, or GHC 31,200 at the time of writing and pays part of the money, or even pays all, but has not put the land to any use, these traditional authorities can resell the same land to a different buyer who can afford to pay much more money to the tune of $20,000 (GHC48,000), something like a ‘money show power’ system. One therefore, must check and be very sure that the land he wants to buy has not already been sold out. Don’t get scammed.
    4. Ghana Lands Commission - The buyer would also have to check with the lands commission to ascertain whether the land in question has already been registered in another buyer’s name or has already been sold out. Sometimes, the delay in the registration process on the behalf of the land commission causes the multiple sales of a land, and it also gives some greedy chiefs and land guards the opportunity to sell that same parcel of land to other unsuspecting people. In the event the land title has already been registered, refrain from buying it.
    5. Follow-Ups - After you, the prospective buyer have done your due diligence and checks to ensure that the land does not already belong to someone else, you must consult the town and country planning agency in the area, to be informed about the land. For example, people who want to buy lands in Tema – and its nearby towns must consult the Tema Development Corporation (TDC). It helps the buyer to know if the land has been earmarked for a market place or it has been designated for a road construction.

      The buyer would also know if the land is a government acquired property. This would save the buyer from future demolition after he had had to spend thousands of dollars to put up a house only for it to be demolished by an original owner or the government. Such demolitions do not come with any compensation, and this could be the greatest lost.
    6. Ghana Court Endorsement of Land - Some lands could have injunction placed on them by a court, in the situation whereby its ownership is being claimed by two or more people. Such lands are not supposed to be bought by a new buyer if its proprietorship is being challenged in court. Therefore, it is advisable that you avoid such lands even if one of the alleged owners, a land guard or even a chief wants to sell it at a cheaper price to you. Beware that until the final decision by the court, that land remains untouched.
    Purchasing a land and putting it to a full use, for it to be taken back from you could be very traumatic. Consequently, every individual must ensure that, the above steps are taken in their search to buy a land in Ghana and knowing its ownership. This is very important and will save you from unnecessary headache and financial lost.

    We can help! Let us purchase land for you and process all documentations. We have 100% success rate with no litigation issues. Our knowledgeable and qualified lawyers and personnel based in Ghana will handle your land needs for an affordable fee. Please contact us and let us know how we can help.

    Monday, February 3, 2014

    Interest Rates on Mortgage Loan in Ghana and Its Impact on The Average Ghanaian

     Interest Rates on Mortgage Loan in Ghana

    If acquiring mortgage loan is a challenging and an exasperating option for many average Ghanaians, the interest rates that come with it is proven to be a catastrophic burden to all. In Ghana, many people have decried the rates at which interests are being charged by financial institutions and mortgage brokers, describing them as outrageous!

    There are many local financial institutions, which deal in mortgage loans. These financial institutions include; Ghana Home Loans; Home Finance Company (HFC); Barclays Bank; Eco Bank, and United Bank of Africa (UBA).With a total global capital of around 70 million dollars, and contrary to other international banks, Ghanaian mortgage brokers do not have the sufficient financial capacity to cater for customers’ loan needs. In general, they will offer loan ranging from GH ¢24,315,700.00 ($10,000) to GH ¢243,157,000.00 ($100,000), only; and that comes with untenable high lending rates.

    The interest rates as charged by these financial institutions are between 25%-40% on a mortgage loan, making Ghana the country with the highest interest rates in Africa, and the second highest in the whole wide world. This simple scenario reflects very well the ‘absurd nature’ of Ghana’s mortgage interest rate charges. For instance, should one borrow an amount of GH ¢100,000.00 ($40,588.6) for a 10-year period, by the close of the first year only, the borrower is indebted to the bank to the tune of GH ¢140,000.00 ($56,823.95). Meaning, by the end of the 10-year period, the borrower would have paid the bank more than 400% of the original amount on loan; meanwhile, the property they bought or built would not have its value increased that much. In fact, financial institutions are the ones who are making unacceptable exorbitant profits at the expense of the average Ghanaian.

     House plan

    Against all the fiercest criticisms, banks and other mortgage brokers continue with their recurrent activities, justifying the interest rates that they have been infringing on their customers. Banks argue that they have to deal with the cost they incur in terms of the hazardous nature of the loans they give out to customers. Meanwhile, researches have shown that these mortgage brokers refuse to do due diligence and rather blame their customers –predominantly in the informal sector – to be too secretive about their businesses, inefficient, unrealistic in their plans, and volatile.
    Whichever the excuses, it is evident that these high interest rates pose a threat to the economy of the country. It stifles the free flow of both the government, corporate, and individual’s dealings – rendering the whole economy helpless and making Ghana an expensive country to live in.
    1. Mortgage in Ghana is Too expensive - There is no shred of doubt that these gargantuan interest rates are too expensive in the eyes of Ghanaians and most people cannot afford it, except a handful of those who “have made it” in life. The average Ghanaian earn a little over GH ¢3,500 ($1,420) annually, and so it is very obvious that he cannot think of acquiring a mortgage loan. Already, there would be a tall list of necessities he needs to be provide for the family including paying of school fees, payment of utility bills and the rest. Therefore, how much can he afford to deduct from this money to pay for a loan with such huge interest?
    2. Inaccessible Mortgage in Ghana - The fact that one’s source of income and the income itself is a determining factor in acquiring a mortgage loan automatically disqualifies the average Ghanaian who earns just a little over GH ¢300.00 ($121) as salary from obtaining a mortgage loan. This means, he can never live in his dream house because he would not be able to build or buy a house of his own house since he cannot borrow for that purpose.
    3. Ghana Mortgage Interest Rates Hardships - High interest rates brings hardship, making living very difficult in Ghana. The pressure of owing a financial institution such a huge sum alone is frustrating. And what happens if the borrower loses his job later? This will amount to foreclosure – where the property would be retrieved from the borrower when he is not able to pay his loan at the given time. This means, he has actually suffered to loose – in terms of having sacrificed so much money to acquire a property, which was never recovered.
    Ghana’s high mortgage interest rates remain a contentious issue, stirring hitting debate between Government and the Bank of Ghana.

    While others have blamed the government for not doing enough to control mortgage interest rates, substantially; some members of parliament have cautioned Government and the Bank of Ghana about disastrous consequences, should these two entities fail to engage in a workable resolution to this long-term controversial exorbitant mortgage interest rate. Just as the Minister in Charge of Financial and Allied Institutions rightfully put it during a debate on the country’s Treasury bill:

    “The issue of high lending rates to customers must be a major concern to many people, and until it addresses economy, it will not make any headway but keep going round in circles.”

    Dont Miss Out On Updates, New House Plans & New Articles
    Stay up to date! Simply fill out the forms below and we will notify you as soon as new House Plans become available, plus receive Ghana Homes house building insightful articles in your inbox.

    About Ghana Homes

    Ghana Homes provides luxury high-quality properties in Ghana . We offer state-of-the-art living conditions reflective of the rapid advancements in technology and a growing need for quality housing for both low and high income families. Our group is dedicated to a hassle free living environment in which our client can enjoy all of the benefits of a safe, attractive, and inviting property.

    Other areas of service:

    • Architectural Services:
      • Ghana Residential Homes
      • Ghana Commercial Properties
    • Ghana Land Acquisition
    • Property Resale
    • Real Estates Law
    • All forms of real estates transaction in Ghana

    Copyright © 2012 - - All rights reserved.