A Comprehensive Guide to Understanding Mortgages for Buyers and Agents

As a buyer in the real estate market, understanding the intricacies of mortgage financing is crucial to making informed decisions and ensuring a smooth buying process. We will provide you with a comprehensive overview of mortgages, focusing on the terms and conditions, qualification requirements, and key factors that lenders consider. By familiarising yourself with these important details, you can navigate the mortgage landscape with confidence and find the best financing options for your needs.

Establishing Relationships with Mortgage Bankers

Before delving into the details of mortgages, it is essential to establish relationships with reliable mortgage bankers if you are a real estate agent. Collaborating with two or three mortgage bankers can create a mutually beneficial partnership. They can refer clients to you, while you can recommend properties to them. This synergy facilitates smoother transactions and expands your network within the real estate industry. Building a strong rapport with mortgage bankers will ensure you have access to the latest financing options and valuable insights into the market.

Understanding Mortgage Terms and Conditions

When it comes to mortgage financing, one of the primary considerations is the terms and conditions set by lenders. These terms may vary depending on the country and the specific lender. For example, in Ghana, the standard practice for Ghanaian citizens or those born in Ghana is an 80-20 arrangement. This means that a down payment of 20% is required, and the remaining 80% is financed by the mortgage provider.

However, if you are a non-Ghanaian or hold a US passport instead of a Ghanaian passport, it’s important to note that the down payment increases to 30%. In this case, the bank would finance 70% of the property value. It’s worth mentioning that these figures may vary among different banks, so it’s crucial to be aware of the specific terms offered by the lenders you work with. Understanding the terms and conditions will help you guide your clients effectively and ensure they are prepared for the financial obligations associated with their mortgage.

READ ALSO: Mortgage Opportunities in Ghana

Qualification Requirements for Mortgages

Another vital aspect of mortgage financing is determining whether the prospective buyer qualifies for a mortgage. During the initial customer profiling process, it is important to gather relevant information about the buyer’s financial situation. By asking pertinent questions about their financing options and conducting a thorough assessment, you can determine the most suitable approach for their circumstances.

In Ghana, for instance, the minimum age requirement to qualify for a mortgage is 21. It is crucial to be aware of this when working with potential clients to avoid wasting their time and manage their expectations effectively. Additionally, factors like the borrower’s age and desired mortgage duration play significant roles in determining eligibility. Some banks may have a maximum age cutoff, such as 55, which impacts the mortgage duration a borrower can obtain. By being knowledgeable about these criteria, you can guide your clients appropriately and recommend suitable mortgage options based on their circumstances.

Interest Rates and Financing Options

Interest rates are a critical factor to consider in mortgage financing. In Ghana, interest rates tend to be relatively high. As a buyer, it is advisable to educate yourself about the prevailing rates and explore alternative options to secure the best financing terms. For example, if the buyer has properties in other countries, they may consider utilising home equity or a home line of credit to secure lower interest rates or even pay for the property outright, thus avoiding the burden of high mortgage payments.

In Ghana, mortgages are offered in both US dollars and Ghanaian cedis. Assessing whether the client’s income is in dollars or cedis is crucial in determining the most suitable financing option. Dollar loans often start with a base rate of around 13%, while Cedi loans typically have higher rates, starting at approximately 22%. These rates can be subject to additional margins, so it’s crucial to stay up-to-date with the latest information from the lenders you work with. By understanding the different financing options and interest rates, you can help your clients make informed decisions and optimise their mortgage terms.

READ ALSO: Finding Properties to Buy in Ghana 

Considerations Regarding Income and Job History

A borrower’s income level is a significant factor in mortgage qualification. As a buyer, it’s important to assess your income in relation to the desired property. If your income level is relatively low, it may be advisable to consider more affordable properties or explore alternative financing options. This approach will help manage your expectations and avoid unnecessary stress during the mortgage application process.

Job history also plays a vital role in mortgage financing. Lenders typically prefer borrowers with a stable employment record and no significant gaps between jobs. Job stability is an important factor that lenders consider when assessing the risk associated with lending. Demonstrating a consistent employment history will strengthen your mortgage application and increase your chances of qualifying for the desired loan amount.

READ ALSO: What to Expect when Buying a House 

Having a good understanding of mortgages is crucial for buyers in the real estate market. By familiarising yourself with the terms and conditions, qualification requirements, interest rates, and financing options, you can make informed decisions and navigate the mortgage process effectively. Building relationships with reliable mortgage bankers, staying up-to-date with market trends, and guiding your clients based on their specific circumstances will set you up for success as a buyer in the real estate industry. Are you considering buying any property in Ghana using a mortgage? We can always have a chat so I can guide you to make the right decision.

This article is an excerpt from the book ”The Luxury Agent Blueprint: Building a Profitable Career in the High-End Real Estate Market”  by Kekeli Buckner. The book is designed to guide real estate agents, beginners and professionals alike to gain more insight and understanding. The book has 26 chapters which cover topics, such as negotiations, gaining clients, mortgages, commissions and more. Click here to get a copy. 


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