With the cost of rent rising across Nigeria’s major cities and access to mortgage financing expanding slowly but surely, many Nigerians in 2025 are asking a critical question: “Should I keep renting or buy a house through a mortgage?”
This is more than just a lifestyle decision: it’s a financial one that can impact your net worth, peace of mind, and long-term security.
In this post, we will break down the real numbers, lifestyle pros and cons, and what makes the most financial sense in today’s economy.
If you’re stuck between the freedom of renting and the stability of homeownership, read on—this guide will help you choose wisely.
The State of the Nigerian Housing Market in 2025
The Nigerian housing market is experiencing both pressure and potential in 2025.
- Average rent in Lagos ranges from ₦1.8M–₦5M yearly, depending on the area. Abuja, Port Harcourt, and other urban centres are seeing similar spikes.
- Nigeria still has a housing deficit of over 17 million units, pushing demand higher.
- Mortgage interest rates hover between 9.5 % and 19%, depending on the lender and loan tenure.
- Government-backed options like the National Housing Fund (NHF) are gaining traction among first-time buyers.
- Real estate hotspots like Epe, Ibeju-Lekki, Gwarinpa, and Lokogoma are witnessing high investor interest and land appreciation.
While renting remains more flexible, homeownership is slowly becoming more accessible especially for middle-income earners with stable jobs.
Renting in Nigeria: Advantages, Disadvantages, and Real Numbers
Pros of Renting
- Lower upfront cost: No need for a 20–30% down payment.
- Mobility: You can move closer to work, switch cities, or change neighbourhoods as needed.
- Fewer responsibilities: No property tax, maintenance, or repairs.
Cons of Renting
- Zero equity: Your monthly rent builds wealth for your landlord, not you.
- Annual rent hikes: Landlords adjust prices in response to inflation or increased demand.
- No permanence: You’re always one notice away from needing to move.
Rent Example: Lekki in 2025
A 2-bedroom flat in Lekki Phase II goes for ₦3.2M/year on average. That’s ₦16M in 5 years with nothing to show in ownership.
- Mortgages in Nigeria: How They Work in 2025
Common Mortgage Types
- NHF (National Housing Fund) – Low-interest loans for eligible Nigerians through the Federal Mortgage Bank.
- Commercial Bank Mortgages – Higher interest but faster processing and flexible terms.
- Cooperative/Employer-backed Mortgages – Often used in public service and private firms.
Mortgage Costs: Real Breakdown
Let’s say you want to buy a ₦30M home in Abuja
- Down Payment: 20% = ₦6M
- Loan: ₦24M over 15 years at 14% interest
- Monthly Repayment: ₦330,000 – ₦360,000
- Total Repayment Over 15 Years: ₦59M – ₦65M
- But you own an appreciating asset worth possibly ₦70M+ by then.
Benefits of Mortgages
- You gain ownership over time (forced savings).
- You can build equity while still living in the home.
- Property may appreciate, yielding long-term profits.
Challenges
- High-interest rates and fees
- Risk of default if income is unstable
- Upfront costs: valuation, legal fees, insurance, etc
Renting vs Mortgage: Cost Comparison Over Time (2025–2040)
Let’s say Ada decides to rent a house at ₦3 million per year, while Chinonso buys the same house using a mortgage, paying ₦360,000 per month.
After 5 Years:
Ada pays ₦15 million in total rent but owns nothing.
Chinonso pays ₦21.6 million in mortgage and already owns one-third of the house.
After 10 Years:
Ada has spent ₦30 million on rent but still has no property.
Chinonso has paid ₦43.2 million and now owns about two-thirds of the home.
After 15 Years:
Ada’s total rent hits ₦45 million, with zero equity.
Chinonso completes ₦64.8 million in payments and owns the house outright.
Now here’s the kicker: if that house’s value grows to ₦75 million or more in 15 years (which is likely), Chinonso walks away with a fully paid home worth much more, while Ada has nothing to show for her years of rent.
The Verdict:
Renting may seem cheaper at first, but it builds no wealth.
A mortgage costs more monthly, but in the end, you own a valuable asset. The property value appreciates to ₦75M–₦90M over 15 years, the mortgage payer ends up with a net asset, while the renter walks away with zero equity after paying ₦45M.
Be like Chinonso. Think long-term. Own something
Lifestyle & Emotional Factors Beyond the Money
Why You Might Choose Renting:
- You’re young (under 30) and still moving between cities.
- You don’t have a stable income to commit to monthly payments.
- You value lifestyle flexibility over ownership.
Why Buying Might Be Better:
- You have a family and want stability.
- You have a steady income or business cash flow.
- You want to build long-term wealth through property appreciation.
Bottom line: Buying isn’t always smarter—timing, income, and goals matter.
VI Expert Insights: What Financial & Real Estate Experts Recommend
According to property advisors at Estate Links, mortgage awareness in Nigeria has grown since 2023. More millennial professionals are exploring NHF or cooperative schemes to become first-time homeowners.
The Central Bank of Nigeria and the Federal Mortgage Bank are also promoting homeownership with revised loan structures and digital applications.
Experts advise:
“If your monthly rent is close to a possible mortgage repayment, and you have job security, consider buying. It’s a long-term wealth play.”
Final Verdict: Which One Makes More Financial Sense in 2025?
Let’s keep it simple:
- Short-term flexibility needed? Rent.
- Long-term wealth, stability & ownership? Get a mortgage.
If you’re earning ₦500K+ per month, have at least ₦5M saved, and plan to stay in one place for 5+ years, mortgage wins.
If you’re still building your income or moving around frequently, renting may give you breathing space while you save and plan.
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Frequently Asked Questions (FAQs)
Is renting cheaper than a mortgage in Nigeria?
Yes—monthly rent is cheaper short term, but you build no equity or ownership. Mortgages cost more upfront but build long-term value.
What is the mortgage interest rate in Nigeria in 2025?
Rates vary between 12% and 19%, depending on the lender, loan amount, and tenure.
Can low-income earners get a mortgage in Nigeria?
Yes—especially through the NHF (National Housing Fund), which caters to workers earning ₦30K+ monthly.
Which banks offer mortgages in Nigeria?
Most commercial banks (GTB, Stanbic, Access, FirstBank), as well as the Federal Mortgage Bank and cooperative societies.
Conclusion: Make the Choice That Matches Your Future
In 2025, the choice between renting and owning a home via mortgage depends on your financial stability, long-term goals, and current lifestyle.
While renting may seem more affordable today, a well-structured mortgage could secure your future, protect you from inflation, and help you build lasting wealth.