What are the major payment plans an investor can follow to own a property in the Nigerian real estate sector?
With the rising cost of lands and properties in Lagos and Nigeria in general and the unfortunate stagnancy of salaries and wages, it has become apparent that people need payment plans to own lands and properties. Thankfully, there are various payment plans in the Nigerian real estate sector that will help speed up the property acquisition process for them.
One of the first questions you should ask a realtor trying to sell a property to you is, what are your payment plans? This will help you know if it’s something you can afford with ease. You don’t have to break the bank to own a property in Lagos.
This article discusses some common ones, looking at their benefits and drawbacks for you as a potential homeowner in Nigeria.
Common Payment Plans in the Nigerian Real Estate Sector
Here are some common payment plans you can use to speed up your property acquisition process in Lagos or any part of Nigeria:
Down Payment
Down payment is one of the most popular payment plans for real estate or any large-ticket purchase in Nigeria. Here, you must make an initial payment to show your commitment to buying the land or property. The payment is usually a percentage of the property’s total price, between 10 and 20%.
After the down payment, the remaining payment is spread across a specified period, say 6 months to 2 years. This is stated in the agreement, including the amounts you’ll pay each period.
One good thing about the down payment plan is that it allows you to incorporate other payment plans. You can complete your purchase with a mortgage loan and pay periodically to the mortgage company or use a different financing agreement. The mortgage plan gives you an extended repayment period, allowing you to spread the property payment over a 10 to 15-year period.
However, you must understand that some extra charges might be involved, as the real estate company will require you to pay for registration, stamp duties, and other charges that might cost up to 3 to 5% of the property price.
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Construction-Linked Plan
The construction-linked or possession-linked payment plan is favorable to both real estate investors and property owners. This is because it enables the owners to finance their property development with the investor’s money while allowing the investor to buy a property by paying in bits.
The construction-linked payment plan is structured to get the buyer to make little payments throughout the construction duration. You will be required to make an initial payment of 10-15 percent, with the remaining linked to the construction milestones. For example, you can pay 15 percent of the property cost before the construction commences and make subsequent 15-20 percent payments at the commencement of each construction phase.
One advantage of construction-linked payment plan is that the developer will ensure that the construction is never delayed. This is because the payments you made are tied to milestones and will be released only at the commencement of each phase. Also, it doesn’t put pressure on you as the payment is linked to construction milestones and not tied to a given period.
Flexi Payment Plan
When a new property launches, you can use the flexible (Flexi) payment plan to speed up your property acquisition process. It requires you to make a down payment of about 50% of the property price before it is completed or allocated. Then, the remaining 50% is spread across the construction period of the property. It is a combination of the down payment and the construction-linked plan.
The Flexi Payment Plan is a favorite of many real estate investors for several reasons:
- It allows you to get the property at a discount, as your money is required for completion.
- The down payment amount is flexible, as you can negotiate to pay more or less, depending on your financial strength.
- The remaining payments after the down payment are scheduled according to the construction milestone.
However, while the Flexi Payment Plan has many advantages for investors, it also has drawbacks. Your money can get trapped if the property development stalls.
Time-Linked Payment Plan
Unlike the construction-linked plan, the time-linked payment plan allows you to pay for a property within a preset timeline. It requires you to agree with the builder or construction company on the payment structure and duration, which can be spread across many months.
In this payment plan, the builder or real estate company usually offers a discount, ranging from 5 to 10% of the property value, to convince the buyer to make the required financial commitments. The downside is that you’ll need to continue with the installment payments even if the construction is discontinued. Also, since it is time-linked, you don’t have the flexibility to arrange the funds, as you must pay within the given time frames.
Rent-to-Own Payment Plan
Some real estate companies in Lagos offer a rent-to-own payment plan. The essence is to help tenants to own their properties after a given period.
While this isn’t as popular as other payment plans, it’s a viable option to start benefiting immediately. This is because it allows you to make partial payments towards buying a house while still living in it.
The rent-to-own payment plan allows you to lease a property for a specified period, with the option to buy once the lease expires. While the lease is still on, you pay a fixed rent, which is shared between the property lease and the purchase. That means a part of your rent is set aside as a down payment towards the property’s purchase price.
This payment plan has many benefits, some of which are:
- Flexible and convenient payments that allow you to plan your finances as a tenant.
- A smooth pathway towards homeownership.
- A rent payment that serves the purpose of securing a lease while contributing toward ownership.
- The property price is locked in at the time of the rental agreement. This helps you to avoid the risk of the rapidly increasing property prices in Lagos.
Do you have a payment plan?
Yes. We have flexible payment plans to enable you to buy land or property of your choice in Lagos. Our payment plans include the flexi payment plan, the construction-linked plan, the down payment plan, and more.
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Conclusion
Payment plans in the Nigerian real estate sector are there to help you own a property. This is something you can achieve even with a not-so-significant salary. You can buy land with a monthly salary of N100,000 and even begin building on it with a good payment plan.
However, it’s important that you understand the terms and conditions of every payment plan before signing the agreement. This ensures you choose a plan that not only aligns with your financial status but also doesn’t put your initial payments or down payment at risk.
At God’s Land Empire Real Estate, we aim to make real estate ownership and investment a stress-free journey for you. Contact us today for details of our juicy payment plans tailored to give you the best real estate investment experience.
Would you like to buy land or house in Epe, Ajah, Lekki, Ibeju-Lekki or anywhere in Nigeria? Reach out to us on +234 806 400 3456 or send an email to support@godslandempire.com. We are ever ready to assist you on your property ownership journey in Nigeria.
