Case Studies
At Ghana Home Loans, we believe a house is not just a home but should also be used as a financial asset – an instrument which is regularly employed to store and release capital throughout the lifetime of its owner.
Taking out a mortgage allows the homeowner to store and save money that would otherwise be paid out as rent. Whereas rent once paid can never be recovered, a mortgage can always be refinanced allowing the homeowner to receive a lump sum to be used for other business ventures or financial obligations.
A Ghana Home Loans mortgage offers homeowners with competitively priced, structured, long term financing which should compare favourably with other forms of more expensive short term funding. As demonstrated by some of the case studies below, a mortgage can be used in a variety of ways to achieve long term savings target, provide funding for business proposals, or basically used to steadily migrate upwards through the various classes of housing units currently available in market.
Case 1: First time buyer
Profile: Kwasi is a single applicant, aged 28, earning net salary of ¢10,000,000 (c. $1,100) per month, his employer pays an additional ¢2.7mm ($300) in housing allowance per month. This borrower is looking to buy a $60,000 house in an Accra suburb.
Payments required:
Processing fee - ¢1.8mm ($200)
Professional services (lawyer, surveyor, insurance etc) - paid directly to respective firms
25% Deposit - ¢135mm ($15,000)
1% Facility Fee - ¢5.4mm ($600)
Monthly payment - ¢4.9mm ($551, at 12.0% per annum)
Escrow account (equivalent of 3 monthly instalments) - ¢14.9mm ($1,652)
Kwasi may be able to negotiate with his employer to either provide a loan to cover the deposit or convert his housing allowance into a $14,400 loan, 4 years equivalent of housing allowance paid upfront.
Case 2: Trading Up
Profile: Married couple, Kwabena and Berlinda, wish to acquire their dream family home valued at $100,000. Kwabena earns a net salary of ¢15,000,000 ($1,660) and Berlinda earns ¢10,000,000 ($1,100) a month. Their combined gross take home monthly salary is approximately ¢25,000,000 ($2,760).
The couple has an existing mortgage on a smaller property which is currently valued at $40,000. The couple has serviced this existing mortgage for sometime and now own 70% equity in the property i.e. $28,000.
The couple have decided to sell the existing property at $40,000 to repay the existing mortgage of $12,000 (30% of the sale proceeds) and apply their equity, the remaining $28,000, towards the deposit on the new house. They will require a $75,000 mortgage.
Payments required:
Processing fee - ¢1.8mm ($200)
Professional services (lawyer, surveyor, insurance etc) - paid directly to respective firms
25% Deposit - ¢225mm ($25,000)
1% Facility Fee - ¢6.75mm ($750)
Monthly payment - ¢8.3mm ($918, at 12% per annum)
Escrow account (equivalent of 3 monthly instalments) - ¢24.8mm ($2,753)
Case 3: The Entrepreneur – Equity Release Loan
Profile: Adrian is employed full time at a leading financial institution. However, he wants to establish a state of the art cyber café to supplement his income and also indulge in his personal interest in ICT. He estimates the total cost of this project at $25,000 and has several sources of short term funds to cover this amount.
However as a start up venture, Adrian would like his initial monthly outlays to be limited as possible while he builds the business. Fortunately he owns his Spintex Road three bedroom home valued at $85,000 which he bought several years ago and owns outright.
He therefore decides to re-mortgage the property to raise a 15-year $25,000 facility to start his project.
Payments required:
Processing fee - ¢1.8mm ($200)
Professional services (lawyer, surveyor, insurance etc) - paid directly to respective firms
25% Deposit - n/a
1% Facility Fee - ¢2.3mm ($250)
Monthly payment - ¢2.7mm ($306, at 12% per annum)
Escrow account (equivalent of 3 monthly instalments) - ¢8.3mm ($918)
Case 4: The Investor - Buy to Let Mortgage
Profile: Victorine currently owns her East Legon home but she would like to acquire a smaller property on Spintex Road, initially as investment to rent out to tenants and later as a home for her graduate daughter currently overseas.
The East Legon property is valued at $200,000 and the Spintex Road house is $50,000. Victorine has at least two options - either buy the Spintex Road property outright or provide her daughter with the 25% deposit required to take a mortgage in her own name. She expects to receive $300-400 a month in rental income from the new property and is prepared to cover the shortfall in mortgage repayments from other sources of income.
Victorine decides to remortgage her East Legon house and give the proceeds ($12,500) to her daughter who uses that as her deposit to apply for a First Time Buyer mortgage to acquire the Spintex Road house. Bother mother and daughter will as such have to apply for GHL mortgages.
Payments required (Mother - $12,500 Equity Release mortgage):
Processing fee - ¢1.8mm ($200)
Professional services (lawyer, surveyor, insurance etc) - paid directly to respective firms
25% Deposit - n/a
1% Facility Fee - ¢1.15mm ($125)
Monthly payment - ¢1.4mm ($153, at 12% per annum)
Escrow account (equivalent of 3 monthly instalments) - ¢4.1mm ($459)
Payments required (Daughter - $37,500 First Time Buyer Mortgage):
Processing fee - ¢1.8mm ($200)
Professional services (lawyer, surveyor, insurance etc) - paid directly to respective firms
25% Deposit - ¢84.4mm ($9,375)
1% Facility Fee - ¢3.4mm ($375)
Monthly payment - ¢4.2mm ($471, at 12.5% per annum)
Escrow account (equivalent of 3 monthly instalments) - ¢12.6mm ($1,413)