Hi everyone

does anyone have any ideas on this predicament

one wants to buy an apartment for lets say Kshs 10 million. Cost of borrowing is at 14% pa. If u take a loan for 15 years your monthly repayment will be Kshs 133,174 meaning after 15 years you have have paid a total of Kshs 23,971,320(180 x 133.174). It doesn't make sense to borrow at this high rates. Are there any institutions who give mortgages at cheaper rates than 14% or what is the solution!!. How much does one have to earn a month to be able to finance a loan and run the house at the same time and what about school fees etc??!!!


bobby the shares guru

I think the market rate for mortgages in Kenya is about 14-15%.

Unless you are a banker,in which case you get mortgages as low as 5%(Stanchart),7%(Barclays),or a civil servant - 5%

One question though - The interest rates in Japan are as low as 1%.. can one take advantage of these rates to buy property say in Kenya?

Just wondering..

sounds a bit ridiculous. are u sure you have worket it out right. what are the details i.e. how much deposit will u be paying,will the interest be charged on reducing balance basis?

I agree with you. Mortgage rates in kenya are ridiculous!! its slavery i tell you.
Once EB bought out HFCK i expected them to shake up the mass market but NOoo... their bespectacled MD is still barking up the wrong tree

Lets wait for this REITS thing and see how it works out

Me first,U next

This is my personal experience:

In early 2002,an opportunity arose to buy a flat in a very decent neighbourhood. Cost was Sh2.5m. Terms were: deposit 10%,balance payable in 15years at 15%pa interest. Therefore,monthly installments were sh31k

At that time I was paying sh17k rent for an identical flat (in the same block!). I took the deal an moved to the 'my' flat.

Now instead of paying the agreed 31k for the mortgage,I paid 40k every month. At that rate,I had calculated that the loan would be finished in 8 years instead of the agreed 15.

Two and a half years later,I lost my job and I had to cut the payments back to 30k. But by that time,the loan balance had gone so below the standard amount that the minimum installment payable was 28k instead of 31k.

So,even with 30k,I was still paying more than the required amount.

Over the next four years,I slowly upped the installment to 35k as my finances improved. By November last year,the loan balance was 930k. Now if I had stuck to the agreed 31k installment,my balance at that moment would have been 1.77m....a whole 840k more.

Nov last year I did some digging and found some money sleeping in a dormant pension account...from my previous employment. I cash it out and cleared the 930k loan balance. Now I am debt-free...making me one of the richest people in the world!

By the way,the flats now are fetching up to 30k per month in rent and their market value is well over 5m.

Moral of the story:


Don't spend too much time complaining that mortgage rates in Kenya are too high. If you don't like them,move to country where the rates are cheaper....houses in Japan are at least ten time more expensive than in Kenya.

The mortgage installment for the house you are staying in is approximately double the rent you are paying.
Your rent will double in the next five years. Decide now whether you want to be paying the rent or the mortgage in 2014....the two amounts will be the same

When you sign up for a mortgage,make sure you can afford slightly more than what the bank asks for...and do pay the little extra

@Mukiha,thats some good inspiration for us starters,I am currently on my first mortgage (a flat) I am not paying more than I should,what I am doing is investing monthly in the NSE with the intention of making a lumpsum payment on the house later (I am hoping the NSE will pay better than the interest that I would have saved by paying high monthly instalments),but I have also identified a new upgrade that i will make a deposit for some time this year and the houses will be ready in 2-3 year period. I will then sell my house and upgrade to the bigger space or if I will have completed the payments,then i will simply start on the new mortgage and rent the current one.

Having said that,I think the point on cost of borrowing is that its just unnecessarily high in Kenya. 14-15% interest p.a on a long-term loan is unfair esp. when one considers that T-B's average 7% and interest income for deposits is 1-3%.


I guess if you can't win with facts,you can always pen bile-laced,xenophobic rants to distract everyone.

As at the time of termination of employment,the Daudi Mwiraria pensions rule had not been effected. Thus my pension had been withdrawn and placed in an interest earning account awaiting collection.

Mortgage rates are quite high! At the end of the repayment period,you end up paying 2-2.5 times the loan value. To take or not to take a mortgage is a decision to be taken carefully after several considerations.

If you are now paying rent to a landlord,how much would you spend in rent in 15 years? If you set a similar amount and invest it each month,how much would it be in 15 years. Will it be enough to buy the same property at that time? (in 15 years).

I took a mortgage last year,but the rate is 6% (negotiated by employer with HF) and am repaying slightly less than the current rent level in the area. However,from last year the property value has increased by 60%.(as it has in several areas in Nairobi).

These are some considerations to make.

Note the law allowing the withdrawal of pension funds for house purchase was not gazetted. However,when you change jobs,you can access the personal pension contributions in full,but you cannot access the contributions from the employer until you retire.


The plans of the diligent lead surely to plenty,but those of everyone who is hasty,surely to poverty.

Interesting article in today's Standard on Sharia mortgages.

http://www.eastandard.ne...013476&cid=470&

hi all

another point is lets say you take the mortgage for 15yrs then u want to sell the house after 5 or so years as the house price has appreciated. Can u sell the house before u have cleared the entire loan or does the bank prevent u from doing so


bobby the shares guru