Acceleration Clause — A clause in a mortgage that allows the lender to demand immediate repayment of the entire remaining loan if the borrower seriously breaches the loan terms (typically missing several monthly payments).

Adjustable-Rate Mortgage (ARM) — A mortgage where the interest rate can change during the loan tenor, usually tied to the MPR or a defined benchmark. Also called a variable-rate mortgage.

Amortisation — The schedule by which a mortgage is paid down through regular payments. Early payments are mostly interest, later payments are mostly principal.

Annual Percentage Rate (APR) — The total cost of borrowing per year, including interest plus fees, expressed as a percentage. Higher than the headline rate.

Approval-in-Principle (AIP) — A lender’s preliminary commitment to lend, subject to final documentation and valuation. Useful for clients shopping for properties.

Balloon Payment — A large lump-sum payment due at the end of certain loan structures.

Cap — A limit on how much an adjustable-rate mortgage’s interest rate can rise in a given period or over the loan life.

Closing Costs — Fees paid at the conclusion of a mortgage transaction — legal fees, valuation fee, stamp duty, registration charges, broker commission, etc. Typically 5-10% of property value in Nigerian practice.

Collateral — The asset (the property) pledged as security for the loan.

Construction Loan — A short-term loan used to fund building of a property, often converted to a mortgage on completion. Different from a mortgage proper.

Debt-Service Ratio (DSR) — The portion of a borrower’s monthly income that goes to servicing all debt obligations. Most lenders cap this around 33-40% for mortgage eligibility.

Default — Failure to meet the mortgage payment or other loan obligations.

Down Payment — The portion of the property price the borrower pays from their own funds at the start. Typically 20-30% in Nigerian practice.

Equity — The portion of the property value the borrower owns outright. Grows as the loan is repaid and as the property appreciates.

Escrow — An arrangement where funds are held by a neutral third party until specified conditions are met. Used in property transactions to protect deposits and to manage tax and insurance payments.

Fixed-Rate Mortgage — A mortgage where the interest rate stays the same for the entire loan tenor.

Foreclosure — The legal process by which a lender takes possession of a defaulted mortgaged property for sale to recover the loan.

Interest-Only Mortgage — A loan structure where the borrower pays only interest for an initial period, then begins repaying principal. Rare in Nigerian residential market.

Loan-to-Value (LTV) — The percentage of property value being financed by the mortgage. ₦40m loan on a ₦50m property = 80% LTV.

Mortgage Insurance (PMI) — Insurance that protects the lender against borrower default on high-LTV loans. Common internationally; emerging in Nigerian market.

Mortgage Life Insurance — Insurance that pays off the remaining mortgage balance if the borrower dies during the tenor. Standard requirement in Nigerian practice.

Origination Fee — A fee charged by the lender for processing a new loan, typically 1-2% of loan amount.

PITI — Principal, Interest, Taxes, Insurance — the four components of a complete mortgage payment.

Pre-Payment Penalty — A fee some lenders charge if the borrower pays off the loan early. Less common in Nigerian market.

Principal — The original amount of the loan, distinct from interest charged on it.

Refinance — Replacing an existing mortgage with a new one, usually to lower the rate, extend tenor, or take out equity.

Tenor — The duration of the loan in years. Nigerian mortgages typically run 10-25 years.

Underwriting — The process by which a lender evaluates a loan application and decides whether to approve.

Allocation — Government’s grant of land rights to an individual or entity, usually evidenced by a Letter of Allocation prior to formal C of O.

Bare Land — Land without buildings.

Boundary Dispute — Disagreement over the precise edges of a property. Surveyor’s beacons and registered survey plans resolve these.

Brownfield — Previously developed land being redeveloped.

Building Approval — Authorisation by the planning authority (LASBCA, FCDA, etc.) to construct a specific design on a specific plot.

Certificate of Occupancy (C of O) — The document evidencing the right to occupy state land under the Land Use Act, typically for 99 years.

Conveyance — The legal transfer of property from one owner to another.

Deed of Assignment — The legal document transferring ownership.

Easement — A right held by someone other than the owner to use part of the land, e.g., utility companies’ rights to run cables across a property.

Encumbrance — Any claim, lien, charge, or restriction on a property that may affect title or value.

Estate — A defined area of land containing multiple properties, typically with shared infrastructure.

Excision — Land removed from a previously larger area (often from government land) and allocated to specific use.

Family Land — Land held by a family group under customary tenure. Requires special handling for transfer.

Fee Simple — The most complete form of ownership. In Nigerian context, most rights are leasehold (under C of O) rather than fee simple.

Freehold — Outright ownership, not subject to a leasehold structure. Rare in modern Nigerian practice except for some pre-Land-Use-Act titles.

Gazette — Official government publication recording certain land allocations and transfers. Gazetted land has stronger title than non-gazetted.

Governor’s Consent — The Governor’s approval required under section 22 of the Land Use Act for any transfer of land interest.

Indigenous (Native) Title — Customary land rights held by indigenes of a community.

Land Use Charge — Property tax imposed in some Nigerian states (notably Lagos), combining ground rent, tenement rates, and other property-related levies.

Leasehold — Ownership of an interest in land for a defined period (e.g., 99 years under C of O).

Lien — A legal claim on a property securing a debt.

Off-Plan — A property sold before construction is complete.

Off-Take Agreement — A binding agreement, often guaranteed by FMBN, where the buyer commits to acquire units from a developer once complete.

Plot Number — A unique identifier for a parcel of land within an estate.

Probate — The legal process for transferring property after the owner’s death. Required before inherited property can be mortgaged.

Setback — The required distance between a building and the property boundary or a street.

Survey Plan — A drawing showing the precise boundaries of a property, signed by a registered surveyor and lodged with the state’s Surveyor-General.

Title — The legal right to a property, evidenced by documentation.

Vacant Possession — The state of a property when all occupants and chattels have been removed, ready for the new owner.

Cash Reserve Ratio (CRR) — Percentage of deposits commercial banks must hold with the CBN. Currently around 50% for most banks.

Capital Adequacy Ratio — The percentage of a bank’s capital relative to its risk-weighted assets.

EDGE Certification — A green building certification system from IFC, requiring minimum 20% reductions in energy, water, and embodied energy use.

EFCC — Economic and Financial Crimes Commission. Investigates financial crimes including mortgage fraud.

ESVARBON — Estate Surveyors and Valuers Registration Board of Nigeria. Regulator for estate surveyors and valuers.

FCCPC — Federal Competition and Consumer Protection Commission. Handles consumer protection matters.

FMBN — Federal Mortgage Bank of Nigeria.

GBCN — Green Building Council of Nigeria.

LEED — Leadership in Energy and Environmental Design. A US-origin green building certification system used globally.

MPR — Monetary Policy Rate. The CBN’s headline interest rate, currently 27.5%.

NMRC — Nigeria Mortgage Refinance Company.

NHF — National Housing Fund.

NIESV — Nigerian Institution of Estate Surveyors and Valuers. The professional body.

NMSF — National Mortgage Standards Framework (in development).

PMB — Primary Mortgage Bank.

REIT — Real Estate Investment Trust. A listed or private fund that owns and operates property.

RSA — Retirement Savings Account, the individual pension account under the Pension Reform Act.

SEC — Securities and Exchange Commission.

Blockchain — A distributed cryptographic database where records are linked into immutable blocks.

cNGN — Nigeria’s privately-issued regulated stablecoin, pegged 1:1 to the naira, operating in the CBN sandbox.

DAX — Digital Assets Exchange. Regulated under SEC, minimum capital ₦2 billion as of January 2026.

eNaira — The CBN’s central bank digital currency, launched October 2021.

ISA 2025 — Investments and Securities Act 2025.

RATOP — Real-World Assets Tokenisation and Offering Platform. Regulated under SEC, minimum capital ₦1 billion as of January 2026.

Smart Contract — Self-executing code on a blockchain that performs operations when conditions are met.

Stablecoin — A cryptocurrency engineered to maintain stable value relative to a reference asset, usually a fiat currency.

Tokenisation — Representing real-world asset ownership as blockchain tokens, enabling fractional and tradeable claims.

VASP — Virtual Asset Service Provider. The SEC-licensed entity providing crypto-related services.

1. What does PITI stand for, and which two letters do many clients forget about?
2. What is the difference between a Certificate of Occupancy and freehold ownership?
3. What is Governor’s Consent and which Act requires it?
4. What does NMRC do and how does it differ from FMBN?
5. What is the minimum capital requirement under the January 2026 SEC framework for a RATOP and a DAX?

— End of Appendix Lesson A2 —

Next: Appendix Lesson A3 — Key Nigerian Laws and Regulations