Interest rates on mortgages in Ghana are so high that only the rich/high-income households can afford them. To be specific, this is about 5% of households in urban Ghana. Let me put this into perspective. A regular home loan from Republic Bank (formally HFC Bank) has a nominal interest of 24% per annum. For a mortgage of 100,000 Ghana Cedis, with a repayment duration of 20 years, your monthly repayments will be about 1,700 cedis. The good thing is that you own the house while making the monthly payments. It’s more like rent, but this time, you’re also the landlord.
Mortgages in Ghana, why the new offers?
Public Sector Employee Home Scheme (PS Home Scheme)
To address the high interest rates on mortgage loans and Ghana’s growing housing deficit estimated at 3.6 million units as of 2010, the government established the National Housing and Mortgage Finance Scheme in 2019.
A mortgage in simple terms, it is a long-term loan where the house or property you’re buying with the loan is at the same time the collateral. Typically, the repayment period for mortgages in Ghana ranges from 5-20 years. If you fail to honour your repayment terms, the bank can take the house and sell it off to recoup their money.
How does this work? National Housing and Mortgage Fund mobilises low cost capital using among others mortgage bonds, housing bonds which it advances to partner banks. Since these funds have low interest rates, banks can similarly charge commensurately low interest rates on mortgages to about 12% per annum. By reducing the interests, more low- and middle-income Ghanaians will be able to afford mortgages to buy homes. The fund also provides relatively cheaper construction finance to designated real estate developers to build at specified price points.
Who is eligible?
- Available to civil servants and public sector employees
- Should have been employed for at least 5 years
- Must not have reached the general retirement age
Where to get the cheapest mortgages in Ghana?
Two banks currently offer mortgages under the PS Home Scheme as follows;
1. Stanbic Bank Ghana
The interest rate on the mortgage loan from Stanbic is 12% per annum. The bank also reports a facility fee of 2% (of the proposed loan amount). See other charges/fees that may be applicable.
Mortgage Conditions
- The salaried account of the applicant(s) should be with the bank
- A net monthly salary of at least 1,800 cedis (salary after taxes)
- Houses priced up to 150,000 cedis
- Repayable for up to 20 years
- Must have at least 20 years before retirement
2. Republic Bank Ghana
The interest rate on a home purchase mortgage is 11.9% per annum. They also offer a 100% mortgage financing facility. This means no compulsory deposit (often 20%). Siblings or spouses can also jointly apply for the home loan. Standard home loans from the bank; home completion mortgage, home equity mortgage, and home improvement mortgages however, have an interest rate of 24% per annum.
Mortgage Conditions
- A mortgage loan up to GHS 140,000
- Maximum loan tenor of 20 years
- Debt service ratio of up to 50%
- This mortgage facility can only be used once
- The salaried account of the applicant(s) should be with the bank or deductible directly from the borrower’s employer or the Accountant Generals’ Department
- Property should be at a regional capital, locations approved by the bank or within a 40 km radius from Accra/Tema, Kumasi, Sekondi/ Takoradi.
You can use the Republic Bank’s mortgage calculator here to see much your monthly repayments could be.
Bonus Tip
The interest rates indicate how affordable the mortgage is. But do not directly compare them. Banks have additional fees/charges on home loans aside from the interest rates. Republic Bank for example, charges 1.5% of the proposed loan amount as processing fee. I have previously discussed how these additional fees/charges impact the overall affordability of mortgages in Ghana.
Prices and Real Estate Developers
One can buy from the following designated developers who have developed special houses for the scheme.
- Adom Estate ― Tema Com. 25
- Blue Rose Construction Ltd ― Kasoa
- Osamanpa Estates ― Kasoa-Amansaman Road
- Yaba Properties Ltd ― Kasoa
- Rehoboth Properties ― Kwabenya
- One can also buy from other developers subject to approval from the respective banks
House prices start from GH$90,000.00
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