Republic Bank Ghana has advised prospective homeowners that their mortgage repayments, together with existing financial obligations, should generally not exceed 50 per cent of their income when assessing their ability to qualify for a mortgage.

Head of Mortgage Banking and Customer Experience at Republic Bank, Dan Adjetey Mohenu, said the assessment takes into account existing liabilities such as personal loans and other financial commitments.

Speaking on Joy FM’s Super Morning Show on Friday, September 4, Mr Mohenu said the 50 per cent threshold is intended to ensure that customers can comfortably meet their repayment obligations.

“We don't exceed 50 percent. And the 50 percent includes your current liability,” he explained.

He said, for instance, that if a customer already has a personal loan taking up 20 per cent of their income, the bank would ordinarily have about 30 per cent remaining for the mortgage repayment when assessing affordability.

Existing loans can be refinanced

Mr Mohenu said having an existing loan does not necessarily disqualify a customer from accessing a mortgage.

He explained that where existing repayments make it difficult for a customer to qualify, Republic Bank could consider refinancing the personal loan and extending its repayment period to reduce the monthly instalment.

“In cases where it's tight, what Republic Bank does is to do a refinancing of the personal loan, maybe extend it longer, so the repayment will drop,” he said.

He said restructuring the existing facility could reduce the customer’s monthly financial obligation and create additional capacity for mortgage financing.

Mortgages can run for up to 20 years

Mr Mohenu said Republic Bank offers mortgage facilities for up to 20 years.

He explained that although a longer repayment period means paying the loan over a longer period, it can significantly reduce the monthly instalment and give borrowers more disposable income.

“The longer you take the loan, the lesser the instalment payment. And so it gives you some more disposable income to go about your daily life,” he said.

No fixed minimum income requirement

The Republic Bank executive also disclosed that the bank does not have a fixed minimum income requirement for customers seeking mortgage financing.

He said applicants could be assessed based on their individual or household income.

Where appropriate, spouses and eligible family members can combine their incomes to strengthen a mortgage application.

Mr Mohenu said joint applications could involve spouses, siblings, parents and children.

He cited the example of a parent applying jointly with a child who is in the final year of university. In such a situation, the parent could initially service the mortgage, with the child eventually taking over the repayments after completing school and securing employment, subject to the bank’s assessment and requirements.

Self-employed persons can apply

Mr Mohenu also encouraged self-employed persons and business owners to consider mortgage financing, stressing that the facility is not limited to salaried workers.

He said Republic Bank assesses the financial records of self-employed applicants, including bank statements, bookkeeping records and audited financial statements where available.

He added that repayment arrangements could be structured to reflect an applicant’s cash flow.

For customers whose income is received quarterly or every two months, for example, repayment arrangements could be structured around those income cycles, subject to the bank’s approval.

Next Habitat Fair clinic

The next mini clinic of the Republic Bank JoyNews Habitat Fair is scheduled for September 11 to 13 at Marina Mall.

Mr Mohenu said the clinic would allow prospective homeowners to engage directly with Republic Bank officials on mortgage financing and other financial services.

He said the event would also cater to customers interested in credit cards and Small and Medium-sized Enterprise (SME) services.

Mr Mohenu further disclosed that Republic Bank had reduced its mortgage interest rates and urged prospective homeowners to attend the fair to learn more about the available financing options.

He added that the bank’s mortgage services are available nationwide, including in Wa and Bolgatanga, and expressed confidence in a strong turnout at the upcoming clinic