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Is Taking a Mortgage the WORST Decision Ever??
Rank: New-farer Joined: 1/3/2014 Posts: 32
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MaichBlack wrote:dunkang wrote:obiero wrote:a mortgage is a necessary evil. the trick is to ensure computation is on reducing balance and thereafter pay it down fast i.e incase monthly repay is set at 20K, place an extra 20K or more.. that way, you halve the time it takes to clear. its a fight that can be won. plus incase you die, your children shall not be left homeless as insurance shall settle outstanding balance in full.. Aiiih mboss weee. Which mortgage is this ya 20K/-? Kwani ni nyumba au store? A 2,000,000/- 'house' at 12% P.A interest rate for 12 years comes to over 26K/-.  People have jokes!!! Let's use factual numbers. Mortgage repayment of 20k a month at 15% interest rate??? The mortgage would have to be of Kshs. 1,428,992.86=PV(15%/12,15*12,-20000,0,0) Where is this you are buying a house for 1.4 million??? @MaichBlack the numbers for mortgage are readily availabe. Unfortunately, we are still waiting for the numbers of NSE performance over 10-20 years.
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Rank: Veteran Joined: 1/4/2010 Posts: 1,668 Location: nairobi
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dunkang wrote:Tokyo wrote:Mortgage should be avoided if you can. If you can afford kshs3m for downpayment,it might be better to buy plot construct a simple house. Mortgage is not a bad thing, the problem is the rate. Anything less than 6% (i.e. without anyother hidden things) is a BRILLIANT thing. @dunkang, true. The rates in Kenya are too high. Your bet is as good as mine as to whether these rates will ever come down. The only solution left is for Kenyans to think outside the box and make lemonade with the lemons they have been dealt with. Solutions such as the buy a hotel room for kes 2m which can give/offset the mortgage of 27k monthly are the was to go. Other solutions will be for people to build smaller houses/open plan/american style kitchens, etc etc As Iron Sharpens Iron, So one Man Sharpens Another.
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Rank: Elder Joined: 7/22/2009 Posts: 7,910
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knight026 wrote:MaichBlack wrote:dunkang wrote:obiero wrote:a mortgage is a necessary evil. the trick is to ensure computation is on reducing balance and thereafter pay it down fast i.e incase monthly repay is set at 20K, place an extra 20K or more.. that way, you halve the time it takes to clear. its a fight that can be won. plus incase you die, your children shall not be left homeless as insurance shall settle outstanding balance in full.. Aiiih mboss weee. Which mortgage is this ya 20K/-? Kwani ni nyumba au store? A 2,000,000/- 'house' at 12% P.A interest rate for 12 years comes to over 26K/-. People have jokes!!! Let's use factual numbers. Mortgage repayment of 20k a month at 15% interest rate??? The mortgage would have to be of Kshs. 1,428,992.86=PV(15%/12,15*12,-20000,0,0) Where is this you are buying a house for 1.4 million??? @MaichBlack the numbers for mortgage are readily availabe. Unfortunately, we are still waiting for the numbers of NSE performance over 10-20 years. http://www.investinginafrica.net/african-stock-markets/african-stock-market-performance/Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Member Joined: 9/27/2006 Posts: 506
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Rank: Elder Joined: 7/22/2009 Posts: 7,910
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knight026 wrote:Rollout wrote:I am neither an expert in NSE nor Kenya real estate but there are a few wrong assumptions people are making on this thread. To correct that, here is my knowledge:
1) Land do not appreciate indefinately neither is the property prices.
2) A mortgage doesn't give you ownership right to the property, the bank still hold the call opton, as a matter of fact, the bank is the investor with a floor, as the holder of the mortgage you're betting on the upside without any hedge.
3) Mortgage is never a good investment. The concept here is `cherry picking'. Otherwise, also stocks don't appreciate indefinately @knight026 - Stock trading is all about cherry picking!!! If you cannot cherry pick, you have no business being in the stock market. Don't you ever follow discussions in the investors section of wazua for example??? These discussions are always geared towards cherry picking!!! That's the name of the game - for people who know what they are doing! That's why there are threads like "Equity Bank vs KCB". It's obvious BOTH banks are growing but individuals still want to put their money in the bank with greatest return. BAT is a profit making company with an extremely generous dividend policy. But you don't see a thread encouraging people to buy the stock. Why? The price is not "right". When it is, you'll see us directing lorry loads of cash in that direction. There are some many threads in wazua. Stop being lazy and click on some of them and you will see the kind of returns serious wazuans make. All the information is there in black and white. And I have given you so many links and I don't know why you are clicking any of them! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: New-farer Joined: 1/3/2014 Posts: 32
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If we are cherry picking,then you shouldn't have compounded on the return rate. Furthermore, am not asking to challenge, a review of the performance for the past 10-20 years will put your argument in perspective.
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Rank: Elder Joined: 12/7/2012 Posts: 11,937
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knight026 wrote:MaichBlack wrote:dunkang wrote:obiero wrote:a mortgage is a necessary evil. the trick is to ensure computation is on reducing balance and thereafter pay it down fast i.e incase monthly repay is set at 20K, place an extra 20K or more.. that way, you halve the time it takes to clear. its a fight that can be won. plus incase you die, your children shall not be left homeless as insurance shall settle outstanding balance in full.. Aiiih mboss weee. Which mortgage is this ya 20K/-? Kwani ni nyumba au store? A 2,000,000/- 'house' at 12% P.A interest rate for 12 years comes to over 26K/-. People have jokes!!! Let's use factual numbers. Mortgage repayment of 20k a month at 15% interest rate??? The mortgage would have to be of Kshs. 1,428,992.86=PV(15%/12,15*12,-20000,0,0) Where is this you are buying a house for 1.4 million??? @MaichBlack the numbers for mortgage are readily availabe. Unfortunately, we are still waiting for the numbers of NSE performance over 10-20 years. @All you should know people. ... @Obeiro is likely to be working for a financial institution/bank where the rates are less than 8% and repayment period is the retirement age minus your age. therefere the 20k monthly repayment can be even 5m! In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Veteran Joined: 11/2/2006 Posts: 1,206 Location: Nairobi
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2012 wrote:Lolest! wrote:Great piieces @blackman. But how many people make 25pc per year on investments? Where can you invest to get 25%??? If this were possible, why would any bank give loans at while they can put it in the 25% earner? Ya'll stop being lazy & as someone said, read threads on Wazua! I have made net returns of 37% on Coop Bank (9 months) & 12% on Equity (17 days). Of course this wont happen every year....but I think you can make decent returns at NSE. Perhaps Guka can give us some 10-20yr perspective :) Formally employed people often live their employers' dream & forget about their own.
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Rank: New-farer Joined: 1/3/2014 Posts: 32
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bird_man wrote:2012 wrote:Lolest! wrote:Great piieces @blackman. But how many people make 25pc per year on investments? Where can you invest to get 25%??? If this were possible, why would any bank give loans at while they can put it in the 25% earner? Ya'll stop being lazy & as someone said, read threads on Wazua! I have made net returns of 37% on Coop Bank (9 months) & 12% on Equity (17 days). Of course this wont happen every year....but I think you can make decent returns at NSE. Perhaps Guka can give us some 10-20yr perspective :) No one is lazy. Everyone knows the numbers have been good the past 2-3 years. That withstanding, to conclusively argue against mortgages, lets get the numbers for 10-20 years. Then get numbers for real estate, and we compare.
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Rank: Elder Joined: 7/22/2009 Posts: 7,910
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bird_man wrote:2012 wrote:Lolest! wrote:Great piieces @blackman. But how many people make 25pc per year on investments? Where can you invest to get 25%???If this were possible, why would any bank give loans at while they can put it in the 25% earner? Ya'll stop being lazy & as someone said, read threads on Wazua! I have made net returns of 37% on Coop Bank (9 months) & 12% on Equity (17 days). Of course this wont happen every year....but I think you can make decent returns at NSE. Perhaps Guka can give us some 10-20yr perspective :) I'm surprised people are still asking this question (How you can have 25% returns). I provided them with evidence and links as early as post# 9 and post# 14. All they have to do is click! But then again some wazuans are obviously in the mortgages and real estate [selling of overpriced houses - 5th floor 3 bedroom house at 20m!] business and they will not let FACTS get in the way of a "good" argument. You can imagine a sales executive who makes a living "selling loans" going through this thread!!! He/she will definitely ignore all the facts! Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Is Taking a Mortgage the WORST Decision Ever??
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