FAQ – Purchasing Property in Ghana

FAQ - Financial Options for Purchasing Property in Ghana

1. What are the Financial Options for Purchasing Property in Ghana?

In Ghana, there are several financial options available to purchase property:

  • Cash Purchase: Buyers pay the entire property price upfront, avoiding interest rates and loan obligations.
  • Mortgage: Ghanaian banks and financial institutions offer mortgage loans that allow buyers to spread payments over several years.
  • Developer Financing: Some property developers offer payment plans or financing, often with a short-term duration.
  • Equity Release: Homeowners with existing property may leverage their home equity to finance another property purchase.

Each option has its unique advantages, costs, and requirements, so buyers should consider their financial situation carefully before choosing.

Generally, both Ghanaian citizens and foreigners qualify for mortgages in Ghana, but the criteria may differ:

  • Citizens: Employed or self-employed Ghanaians who meet income, credit, and down payment requirements set by banks can qualify for a mortgage.
  • Non-Resident Ghanaians (NRGs): Many banks have specific mortgage programs for Ghanaians living abroad. Proof of income from a reputable foreign employer or business is typically required.
  • Foreigners: Foreign buyers can obtain mortgages from some banks, but they usually must make a larger down payment, typically around 20-50% of the property value, and meet income and credit requirements.

Additional Requirements:

  • Minimum age of 21 and typically not older than 55–60 at the end of the loan period.
  • Stable income that meets the lender’s debt-to-income ratios.
  • Positive credit rating (varies by lender).

Mortgage rates in Ghana are relatively high due to economic factors like inflation. Rates vary by bank, type of mortgage product, and borrower qualifications, typically ranging from:

  • Average Mortgage Interest Rates: 11% to 15% per annum
  • Loan Term: Commonly between 5 to 20 years, though some banks may offer up to 25 years for Ghanaian residents or NRGs.
  • Currency Options: Mortgages may be available in Ghanaian cedis (GHS) or U.S. dollars (USD), with slightly better rates often available for dollar-denominated loans for foreigners.

Rates and terms can vary widely, so it’s advisable for buyers to consult multiple lenders to get the best rate available at the time of application.

The mortgage application process in Ghana typically involves these steps:

     1. Mortgage Pre-Approval: Prospective buyers submit an initial application with financial information to see if they pre-qualify for a loan and how much they might borrow.

     2. Property Search: Once pre-approved, buyers can start searching for properties within their budget.

     3. Mortgage Application: After choosing a property, the buyer submits a full application to the bank, including documentation on income, credit history, and the property.

     4. Property Valuation and Verification: The bank arranges a property valuation to assess its market value and verify the legal ownership of the property.

     5. Loan Approval and Offer Letter: If the bank is satisfied with the property and the borrower’s qualifications, it issues a loan approval along with an offer letter detailing the terms.

     6. Loan Disbursement and Property Purchase: Upon acceptance of the loan offer, the bank disburses the funds directly to the seller or developer, completing the property transaction.

     7. Mortgage Repayments: The buyer begins regular monthly payments to the bank as per the agreed schedule.

The required documentation may vary by lender, but common documents include:

  • Personal Identification: Passport, driver’s license, or national ID for all applicants.
  • Proof of Income:
  • Employed Applicants: Recent payslips (typically the last 3 months) and a letter from the employer.
  • Self-Employed Applicants: Business registration documents, tax returns, and recent bank statements.
  • Bank Statements: Typically, the last 6 months of bank statements to assess financial stability.
  • Credit Report: Some banks may request a local or international credit report.
  • Proof of Down Payment: Evidence of savings or other financial resources for the down payment.
  • Property Documents: Sales agreement, property title documents, and valuation report.
  • Tax Identification Number (TIN): Ghanaian tax ID for local borrowers or a foreign tax ID for non-residents.

Yes, there are additional costs to consider:

  • Processing Fees: Around 1-3% of the loan amount.
  • Valuation Fees: Fees for assessing the property’s market value, usually 0.5-1% of the property value.
  • Legal Fees: Fees for legal processing, document preparation, and registration of the mortgage.
  • Insurance: Lenders may require both property insurance and mortgage life insurance to cover the outstanding loan balance in case of the borrower’s death.
  • Stamp Duty and Registration Fees: Required for official property transfer, typically around 1-2% of the property value.

While foreigners can buy property in Ghana, there are a few considerations:

  • Land Ownership: Foreigners can lease land for up to 50 years (renewable) but cannot own freehold land.
  • Property Financing: Foreigners can apply for mortgage loans but may face stricter requirements and higher interest rates.
  • Legal Assistance: It’s highly recommended for foreign buyers to work with a local real estate attorney to navigate property laws, conduct title searches, and handle lease agreements.
  • Mortgage Interest Deductions: Certain tax reliefs may be available to offset mortgage interest, though these depend on specific tax regulations and the borrower’s residency status.
  • No Capital Gains Tax on Primary Residences: Ghana exempts capital gains tax for property used as a primary residence under certain conditions.
  • Rental Income Tax: Rental income from investment properties is subject to tax, though rates may vary depending on residency status.