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The Real Cost of Buying a Home With Your Pension in Nigeria
The Real Cost of Buying a Home With Your Pension in Nigeria
PenCom recorded 28,437 mortgage-equity approvals worth ₦92.7 billion in the first quarter of 2026.
Eligible workers can use up to 25% of their retirement savings towards a mortgage deposit.
Accessing pension money does not automatically qualify a borrower for a low-interest loan.
Our calculations show how interest can cost more than the amount borrowed.
October 13, () – A Nigerian worker can qualify to withdraw ₦5 million from a pension account for a house and still be unable to afford it. Finding the deposit solves one problem. Financing the remaining purchase price can create a much larger one.
Thousands are taking that route. PenCom’s first-quarter 2026 report records 28,437 mortgage-equity approvals worth ₦92.7 billion. Almost four-fifths involved public-sector contributors. Those figures establish uptake, but do not tell us whether borrowers can comfortably sustain repayments.
For prospective buyers, the consequential decision involves three connected amounts. How much retirement money leaves the pension account, how much additional cash the purchase requires, and how much interest the mortgage will accumulate.
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What Your Pension Actually Pays For
Under PenCom’s guidelines, eligible contributors can apply up to 25% of their Retirement Savings Account balance towards residential mortgage equity.
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That percentage applies to the pension balance. It does not mean the scheme supplies a quarter of any house’s price.
Consider a hypothetical buyer with ₦20 million saved for retirement, pursuing a ₦30 million property. If the lender requires a 30% deposit, the buyer needs ₦9 million. The pension withdrawal supplies ₦5 million, leaving another ₦4 million to find before borrowing ₦21 million.
Where the required deposit is smaller than the withdrawal ceiling, only the required amount can be accessed.
Applicants must be actively employed or self-employed. Salaried applicants need at least 60 cumulative months of employer and employee contributions. Contributors with fewer than three years until retirement are excluded.
Even after satisfying those conditions, the money withdrawn stops earning investment returns inside the pension account. Homeownership may compensate through avoided rent and property appreciation, but neither future house prices nor pension returns are guaranteed. Repairs, insurance and other ownership expenses also remain.
A woman holds house keys Illustrative photograph Source Andrea PiacquadioPexels
The Mortgage Rate Can Change the Entire Calculation
Pension access and mortgage pricing operate under separate rules.
The Federal Mortgage Bank of Nigeria advertises National Housing Fund mortgages at 6%, with terms up to 30 years and loans up to ₦50 million. Its requirements include six months of continuous NHF contributions. Pension eligibility alone does not secure that loan.
To isolate the effect of interest, hold our hypothetical ₦21 million loan and 15-year repayment period constant.
At 6%, monthly repayments would be approximately ₦177,210, with ₦10.90 million in total interest. At an illustrative 20%, repayments rise to ₦368,822, while interest reaches ₦45.39 million.
These calculations assume equal monthly payments on a reducing balance, unchanged rates and no fees or insurance. The 20% scenario is not a lender’s offer.
Rates may also change during repayment. Access Bank’s published mortgage FAQ states, “Our interest rate is floating and subject to review from time to time in line with the prevailing money market condition.”
A borrower therefore needs a repayment schedule showing interest, principal, charges and possible rate adjustments before committing retirement savings.
In the 20% illustration, the first ₦368,822 payment contains ₦350,000 in interest. After paying that instalment, the buyer has reduced the ₦21 million debt by just ₦18,822.
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