Are you struggling with Financing to buy a house in Ghana? Our Ultimate Guide to Installment Payments can help you!
Buying a house is a significant investment and can be daunting, especially when you don’t have a lump sum to pay upfront. Fortunately, buying a house in Ghana with installment payments is a viable option being introduced by real estate developers. With installment payments, you can spread out the cost of buying a house over time, making it more affordable for you.
In this blog post, we will guide you through the different installment payment options made available by real estate companies in Ghana, their pros and cons, and provide you with tips on how to choose the best option for you.
Installment Payment Options for Buying a House in Ghana
There are several installment payment plans that you can use to buy a house in Ghana. These include:
- Developer’s Payment Plan: This plan is usually offered by some real estate developers as part of their sales and marketing strategy and would not exceed 12 calendar months. Under this plan, you make monthly payments to the developer until the full cost of the house is paid off. The interest rates charged on these plans can vary, or be non-existent in most cases, and they can come with different terms and conditions.
- Rent-to-Own Plan: In this plan, you rent the house for a certain period and then own it after you have paid the agreed amount. The payments you make during the rental period go towards the purchase of the house. These plans can also come with different terms and conditions. In Ghana, this option is not usually available for the purchase of premium houses. It is mostly available with housing developments which are funded (fully or partly) by the Government.
- Structured Payment Plan: This is a customized payment plan that can be negotiated with the seller of the property. The prospective homeowner would usually agree on a payment schedule and interest rate and make payments accordingly. It is advised that you critically check the details of the agreed terms and have both seller and buyer sign off with their respective witnesses.
Comparison of Installment Payment Plans
To help you choose the right installment payment plan for your needs, we’ve compared the key features of each of these plans in the table below:
|Payment Plan||Interest Rate||Length of Plan||Eligibility Requirements|
|Developer’s Payment Plan||No||Usually, it does not exceed 12 months.||Requires proof of income, creditworthiness, and an initial deposit.|
|Rent-to-Own Plan||Varies||Varies and may last for years. You can occupy the property while paying for it.||May require proof of income, a deposit and creditworthiness|
|Structured Payment Plan||Negotiated||Usually, it does not exceed 12 months.||May require proof of income, creditworthiness, and an initial deposit.|
Pros and Cons of Installment Payment Plans
Here are some of the pros and cons of using installment payment plans to buy a house in Ghana:
- You can own a home without a lump sum payment upfront.
- Installment payment plans can make buying a home more affordable and accessible.
- Some payment plans can come with lower interest rates compared to other forms of credit.
- Some installment payment plans can come with higher interest rates compared to other forms of credit.
- You may be required to make monthly payments for an extended period.
- You may have to pay additional fees, such as closing costs.
Tips for Choosing the Best Instalment Payment Plan
- Compare different installment payment plans offered by real estate developers.
- Consider the interest rates and terms of each plan to determine which one is the most affordable for you.
- Make sure you understand the terms and conditions of the plan you choose, including any additional fees and payment schedules.
- Determine if you meet the eligibility requirements for the plan you want to use.
Here is a table that compares installment payments offered at Regimanuel Gray Ltd.
|Developer||Property||Payment plan||Interest Rate|
|Regimanuel Gray||Adom Gate Pearls||40% deposit, 40% at lintel, 20% at completion||0%|
|Regimanuel Gray||Adom Gate Pearls||50% deposit, remaining spread for 18 months||0%|
Bank Financing (Mortgage)
Bank financing is another installment payment option available in Ghana. It involves obtaining a mortgage from a bank or other financial institution to finance the purchase of a house. The bank sets the interest rate and payment terms based on the applicant’s credit history and other factors.
Bank financing typically offers higher interest rates than developer financing and the application process is also more involving, and the approval process can take longer. It is advisable to compare the various plans based on what the banks are offering in terms of Interest Rate, Down Payment, Repayment Period and the Maximum Amount you can qualify for.
Pros and Cons of Installment Payment Options
Here are the pros and cons of each instalment payment option for buying a house in Ghana:
Developer Financing Pros:
- Faster approval process
- A more straightforward application process
- No need for a credit score
Developer Financing Cons:
- Higher interest rates
- Smaller maximum amount
- May require a large down payment
Bank Financing Pros:
- Lower interest rates
- Larger maximum amount
- Longer repayment period
Bank Financing Cons:
- Lengthy approval process
- Stringent credit score requirements
- Additional fees