The Federal Mortgage Bank of Nigeria (FMBN) is set to boost financial inclusion with the introduction of a non-interest rent-to-own mortgage loan product.
The innovative housing product, recently approved by the FMBN Board of Directors, is designed to enable Nigerians to own their homes using a mortgage without engaging in an interest-bearing transaction.
FMBN developed the product to eliminate the challenges that eligible Nigerians who want to own their homes through the National Housing Fund (NHF) Scheme face because of the interest-based nature of the Bank’s existing housing products.
The product uses a rent-to-own model that allows beneficiaries to move into FMBN and non-FMBN funded homes and conveniently pay towards full ownership using monthly/quarterly or annual rentals.
The product’s financing structure is based on the non-interest financing contract of Ijarah Muntahia Bitamleek (Lease to Own).
Under this arrangement, FMBN retains ownership of the property until the financing term ends or at any time during the lease period that the beneficiary wishes to purchase the property.
The FMBN non-interest rent to own product is available to Nigerians who must be contributors to the National Housing Fund (NHF) Scheme. It covers both FMBN and non-FMBN funded properties with a maximum price of N15million. Beneficiaries have the options to pay to own the property in monthly/quarterly or annual rental instalments over thirty (30) years depending on their age and years in service.
The MD/CEO, FMBN, Arc. Ahmed Musa Dangiwa noted that the introduction of the non-interest mortgage product represents a historic milestone in the Bank’s drive to bolster access to inclusive mortgage financing for all Nigerians.
“I am excited that we have been able to fix this decades-old problem. For over thirty years, a significant number of the over five million Nigerians who contribute to National Housing Fund (NHF) Scheme have been prevented from taking advantage of their rights because of the interest-based nature of FMBN housing products. What we have done with this product is to create a financing arrangement that recognizes, respects, and speaks to their genuine concerns for inclusion.” Arc. Ahmed Musa Dangiwa, FMBN MD/CEO.