Estate developer calls for review of mortgage law

A real estate developer has called for a review of the mortgage law to enable a lot more people to access mortgages.

The Chief Executive Officer (CEO) of Blue Rose Ltd, Eric Ebo Acquah, said: “The law says if you are 40, you are qualified for a 20-year mortgage. So, if you want to buy a house and when they take about 30 or 40 per cent of your salary, and you can't pay within 20 years, you can't get the mortgage.

“I am saying that it should be reviewed in the sense that in Ghana, the retirement age is 60,” he explained.

Best practice

Speaking in an exclusive interview with the Daily Graphic, Mr Acquah said in all the developed countries, “they don't look at your age, they give you a mortgage. They give it to you 30 years, 40 years, and you pay”.

“This is because, after 40 years, the house will still be there. So, the mortgage law must be reviewed so that a lot of people can access mortgages,” Mr Acquah further explained.

Mr Acquah, who is also the First Vice-President of the Ghana Real Estate Developers Association (GREDA), was suggesting ways the country could address the current housing deficit of 1.8 million.

Second, third tiers

He further proposed that the other way to address the issue of the mortgage system as a way to address the housing deficit was for the banks to attach the second and third tiers of the pension scheme to the mortgage such that even if the person retired and the loan was not done, the two could be used to offset it.  

“Workers have the second and third tiers of their pension fund, which is a lump sum that can serve as a guarantee for workers,” he further explained.

He stated that parts of the second and third tiers were meant for housing for the workers, expressing concern that it had not been explored.

“So, there should be enforcement on the fund manager to make sure that those parts are used for housing for the workers,” he insisted, explaining that many workers were unable to take the mortgage because they would have been serving two loans.

“If I am working, paying rent, and at the same time paying mortgage, I cannot. But if I have a house, all my rent will go into the servicing of the mortgage. So, if at the point of retirement, I have a balance to pay, by that time, the house would have also appreciated.

“So, there's no way I would default. But if you tie it to my age and looking, if you give it to me, by all means, I will not qualify,” Mr Acquah added.

He said there was a correlation between good accommodation and health, stressing that good accommodation also improved the health of the worker.

“So, if people do not have a well-ventilated place to stay, it becomes a burden on the national health system,” Mr Acquah added.

He urged SSNIT to use part of the workers' contributions to support local companies to produce affordable houses for the workers, explaining that when such houses sprang up, that would force estate developers to reduce the cost of housing in the country.