Market Value and Mortgage Value in Nigeria: What Property Buyers Need to Know
Written by: Lucky Ajayi
One House, Two Different Prices?
If you’ve ever tried to buy a house in Abuja with a bank loan, you might have been confused. You find a house you love for ₦100 million, but the bank says it’s only worth ₦85 million for the loan. Why the difference? This common scenario highlights the importance of understanding market value and mortgage value in Nigeria.
It’s because there are two different ways to look at a property’s worth: Market Value and Mortgage (or Forced Sale) Value. Understanding the difference between these two is key to a smooth property purchase in Nigeria. Knowing about market value and mortgage value in Nigeria can save you from unexpected financial gaps.
What is Market Value?
Market Value is the price a normal buyer is willing to pay a normal seller in an open market. It’s the “sticker price” you see on property listings in areas like Maitama or Wuse. This is the general understanding of a property’s worth, often referred to as its market value.
Think of it as the “fair price.” It assumes:
•Neither the buyer nor the seller is being forced to make the deal.
•The property has been advertised so many people know about it.
•Both parties have all the facts about the property.
What is Mortgage Value?
Mortgage Value (often related to Forced Sale Value) is the price a bank uses when they are giving you a loan. Banks are very careful. They want to know: “If this person stops paying their loan, how much can we quickly sell this house for to get our money back?” This is where mortgage value in Nigeria becomes crucial for lenders.
Because the bank might need to sell the house fast (a “forced sale”), they usually value it lower than the market price—often 20% to 30% lower. This gives the bank a “safety net.” This conservative approach defines the mortgage value.
d sale”), they usually value it lower than the market price—often 20% to 30% lower. This gives the bank a “safety net.”
Market Value vs. Mortgage Value: A Simple Comparison
| Feature | Market Value | Mortgage Value |
| Who uses it? | Buyers and Sellers | Banks and Lenders |
| Purpose | To set a fair selling price | To protect the bank’s loan |
| Timeframe | Assumes a normal time to find a buyer | Assumes a quick, forced sale |
| Price Level | Usually higher (the “real” worth) | Usually lower (the “safe” worth) |
Why This Matters for Your Property Purchase
If you don’t know the difference between market value and mortgage value in Nigeria, you might run into big problems:
1.The Funding Gap: If you agree to buy a house for ₦100 million (Market Value) but the bank only values it at ₦80 million (Mortgage Value), they will only lend you a percentage of that ₦80 million. You will have to find the extra money yourself!
2.Overpaying: Knowing the market value helps you negotiate. If a seller asks for much more than the market value, you know you’re overpaying.
3.Insurance: You should usually insure your house for its Replacement Cost, which is often closer to its market value, not the lower mortgage value.
How Tabansi Consulting Helps You
Whether you are a buyer, a seller, or a bank, you need an accurate valuation you can trust. At Tabansi Consulting, we are registered Estate Surveyors and Valuers. We provide professional valuation reports that clearly explain both the Market Value and the Mortgage Value. Our expertise in market value and mortgage value in Nigeria ensures reliable assessments.
We help buyers understand how much they can really borrow, and we help sellers set prices that will actually attract buyers. Our reports are accepted by banks across Nigeria because they are based on deep market research and professional standards.
Key Takeaways on Market Value and Mortgage Value
•Market Value is the fair price in a normal sale.
•Mortgage Value is a lower, “safe” price used by banks for loans.
•The difference between the two can be 20% to 30%.
•Always get a professional valuation before signing a contract to avoid “funding gaps.” This is crucial for understanding market value and mortgage value in Nigeria.
Get an Accurate Valuation Before You Buy
Don’t let “price confusion” ruin your dream of owning a home in Abuja. Knowing the true value of a property is the most important step in any real estate deal. For reliable insights into market value and mortgage value in Nigeria, seek professional advice.
Contact Tabansi Consulting today for a professional property valuation. We’ll give you the clear, honest facts you need to make a smart purchase.
References
[1]Luxury Apartments in Abuja: Top Developments – Tabansi Consulting Blog
[2]Property Valuation in Nigeria: Why It Matters – Tabansi Consulting Blog