Money for Homes

I Never Repay Loans from My Wife, So My Domestic Credit Rating is Severely Compromised

“You shouldn’t plan on running the family on your wife’s salary, so I don’t know how much she earns. But that doesn’t stop me from borrowing money from her and seldom returning it. My domestic credit rating is severely compromised.”

The House: N110 million. Semi-detached duplex at Oniru. About three minutes from Sheraton Four Points. Bought Semi-Off-Plan in early 2019: fully built and roofed sans fittings (tiles, wardrobes etc.).  Delivered after four months. N15 million in bank loan (18%, 4-year tenure). Plus N14.5 million in interest-free “family and friends” loans, to be repaid over 12 months. Extra N3.5 million spent on fancy tiles for master bedroom and visitors’ toilet, creating five additional windows and glass railings. Should appreciate to N140 million in a year.

What do you do?

Husband: I am a strategy consultant.

Wife: I am a manager in one of the Big Four audit firms.

What is your total household income?

Husband: I earn about N35 million per annum. Sometimes not as much, sometimes more. I sell consulting services, so it depends on the business I get.

Wife: I earn N26 million per annum.

Husband: I didn’t know that. I have only a very vague idea of how much she earns. Actually, she always gives me her promotion letters. But I don’t look at the remuneration figures. You shouldn’t plan on running the family on your wife’s salary, so I don’t know how much she earns. But that doesn’t stop me from borrowing money from her and seldom returning it. My domestic credit rating is severely compromised.

For how long did you save to buy your house?

Husband: It’s complex. Let’s say I saved for six, seven months. But my wife is the habitual saver. She probably saved the money over four, five years, not necessarily to buy a house. She saves more of her own income. I often have to reassure her that my inability to save is not because I am paying to keep a woman somewhere in Lekki. Coming under pressure to save to buy the house made me realize how much money I must have been frittering away. More people like me would save to buy houses if there were well-planned, easy-to-access neigbourhoods where you could get even 3-bedroom flats for N30-N40 million. One could buy and sell in four-seven years to get something bigger or move to a swankier part of town.

For how long did you rent?

I have rented since 1999. When I came to Lagos, I was living with my cousin. I came to Lagos in 1997, lived with my cousin till 1999. But as a couple, we started to live together when we married in 2009. We stayed in Magodo since then, until mid-2019 when we moved to our house.  We first lived in a big flat in a very old house in Magodo. It had five bedrooms. The rent was first N550, 000:00. It later climbed to N1, 000,000:00.  Our last rent was N2.4 million for a duplex in Magodo. We lived there for three years.

While saving to buy the house, did you have to give anything up?

Husband:  I wouldn’t say we gave up much while saving to buy a house. We were planning to travel abroad to France for our tenth wedding anniversary but because we invested in buying a house, we had to change plans. So, we couldn’t go. But apart from that I don’t think we sacrificed a lot of things. Payments got delayed here and there e.g. the children’s school fees. When I was growing up, I heard tales about families missing one or two meals a day because they were “developing our site”. Okay, I remember a major lifestyle adjustment. I was using a Range Rover. The engine developed a major fault. I have been using a very modest Toyota for the past 8 months. You can’t get anyone to buy the car for even N800, 000:00. I was using Uber and Taxify. I upgraded to the Toyota when one of my staff left. He was using the Toyota. I would have gotten a cute 2014 Audi A4 if not for our house. I sued the company that sold the Range Rover to me. I believed they concealed critical information about its condition so there was no question of fixing the engine even if I had free money to spend on this. Anyway, I have learnt a vital lesson from using the humble Toyota. I don’t need a car that costs so much to maintain. I can’t believe the cost saving.

I remember something else. In fact, two things. My IPhone 6 got too full, it’s only 64 GB. Then the screen cracked. Any of these incidents would have been the trigger to buy a newer model iPhone. Instead, I bought more space on iCloud. The screen was coming apart after three months of fixing it. iStore Ikeja said nothing could be done. CPR Phone Repair fixed it for N2,000! It’s worked well ever since. Four months now. Then my iPad suddenly gave up life. The natural course of action – acquire the new iPad Pro for N490,000:00 – was out of the question. I have had to be sharing my son’s iPad. I take it to the office when he is in school and he uses it weekends. You must have noticed that I am the hero who made all the lifestyle changes so we could buy this house.

Wife: I wasn’t riding a Range Rover and I wasn’t buying the latest iPhones, so I had no adjustments to make.

Did you borrow to buy the house?

Wife: I had savings in Stanbic IBTC of up to N19 million and I was talking to them about getting a loan. Based on how much I earn per annum, they could do only N10 million and we needed more than that. But because I had my pension savings account with them, since this was a form of security, they agreed to go up to N16 million. They started with 21% interest rate. At last, they agreed on 19%. But I had spoken to GTB where I also had some money – about N1.5 million – about getting a loan. I can’t even remember what became of that but suddenly, someone called me from GTB, after almost four months of not speaking to them at all. Someone I didn’t know called me and offered me a loan and she told me that she could get an approval that same day. She came to my office with the forms, sat with me to complete the forms and offered 17% for a five-year tenure loan. I found her pretty efficient, so when Stanbic called, I told them I was no longer interested.

Husband: I borrowed around £15,000 from a friend who works in England for six months, at no interest rate. I also borrowed N5 million from a friend who works in Bahrain. This was for only one month. I borrowed the N5 million because I was expecting a payment from a client, which got severely delayed. We had to pay the developer a milestone payment. So, the loan was useful for one month before we got some other money. I had to start harassing the company saying I would copy their European HQ and the media on mails demanding payment. Some of the payment was 6 months overdue. Multinationals in Nigeria often have no regard for contractual terms. Almost same standards you expect from our local governments. I wanted to borrow from UBA; I have a corporate account with them. The plan was to borrow N15-N20 million from them, using a house we have that’s worth about N25 million as collateral. But they wanted to take the C-of-O of this house in addition to that of the house we were buying. That was an automatic deal breaker. The discussion lingered and died slowly. You wonder how Nigerian banks ever lose money if they look out for themselves this much.

How did you find the developer? How much was your first payment to your developer friend?

Wife: We found the house advertised on propetyymart.com. It had been erected. But very basic construction. No plastering. Just blocks, no plastering, no fittings. We were to pay and have the house delivered in 9 months. But there was a lot of toing and froing. Though it’s a well-established developer, we weren’t satisfied with the documentation. We started to look at other places. We found interesting houses in Ikoyi and Victoria Island. The 3-4-bedroom flats were somewhat affordable. They were okay since we have a small family. The deal breaker was the N2-4 million service charges. Why buy your own house and still be looking for a yearly payment that is more than your rent?  Months after, I mistakenly sent a message to someone who works with the developer, a marketer. She called back to ask if we were still interested in the property. We started to talk to them again. But the developer added N10 million to the house since he had spent more of his own money plastering the house, doing tiles, and other fittings. We had a more open discussion about gaps in the documentation. There was no document linking him to the owner of the land. They had a joint venture arrangement. But our lawyers said it was okay to go ahead. So, we made the first payment. It was N53 million.

How would you rate your house and your first accommodation in Lagos on a scale of 1-10?

Husband: I first lived at somewhere called Akowonjo, with my cousin. I was working in Yaba. It was okay. After that, I rented a one-bedroom self-contained apartment in Bariga. Apartment makes it sound fancy. It was basically a room with a bath and toilet. We cooked on the corridor. I remember living opposite me then was a young woman of my age, 20-something. A sugar daddy had rented the “apartment” for her and he was always very annoyed when he was around, and I went to borrow matches. He clearly felt borrowing matches could lead to other things! I left the accommodation and went abroad to study. I would rate the Bariga “apartment” 3 and our current place 7.5.

Wife: My own accommodation when I came to Lagos was much better. I was living with my sister and her husband at Omole Estate in a duplex. I had a massive room to myself with air conditioner. So, as for the house we bought compared to my first accommodation in Lagos – I would rate my first accommodation 7 and my current accommodation 8. But for my husband, I guess it was a move from 2 to 8.5. He will not admit it, his start in Lagos was quite humble!

How would you rate the infrastructure of your current accommodation on a scale of 1-10?

Wife: 6/10. It’s about three minutes away from Four Points by Sheraton. But honestly, if you spent money buying a house in such a place in many parts of the world, you don’t expect to see people camped all over selling fruits on the road, mini-markets, small heaps of rubbish etc. around your house. Nigerians are able to build houses that compare very well to houses in the best parts of London and Johannesburg, but we have giant potholes, over-flowing stagnant gutters, heaps of rubbish around them.  The gutter right in front of our house is filled to the brim when it rains for 3-4 days. I remember my husband once jokingly told the developer we bought the house from that we were paying so much to live in a slum.

Two questions. Let’s shoot both together: If you had more money, what kind of house would you buy and where? Secondly, are you planning to make any investment in real estate to get income? And would you take a loan from a bank?

Husband: We wouldn’t mind a flat somewhere nice in Ikoyi, but somewhere without bad roads. But the service charge has to be under N1 million!  From the little I know about how large companies are run in Nigeria, I don’t like buying equity. So, I would invest in real estate; modest things like N30-40 million 4-flat houses or duplexes further down Lekki or even Ajah that you easily find people to rent. Yes, we would borrow 30-40% of the cost. That’s even better than borrowing to buy a place to live in as the loan would be serviced by the rent. It just has to be a good place where you easily get tenants.

Thank you.

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