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Is Taking a Mortgage the WORST Decision Ever??
Rank: Member Joined: 8/5/2011 Posts: 125
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webish wrote:Othelo wrote:kiwaru wrote:Just paid the first instalment into a 25 year old home loan (aka slow death). My reasons for going into mortgage:
1. Peace of mind... since my family must live somewhere, it had better be in MY HOUSE
2. Expense savings: initially an oxy-moron since 96% of the premiums go to interest payment. But the mortgage is 150% of the rent for that hse after raising 15%.
In my previous house I noticed that rent had doubled in about 5 years. So I am thinking long term here
3. Capital appreciation: with the estimated 12% annual capital appreciation, I am building equity that am living in, and I can tap into for whatever
Disclaimer: I am praying to God and i have every intention of clearing the loan before term (every 80% of premiums paid in advance eliminates 11 instalments (direct savings)
Wish me luck There is the catch. Manage that well and you will be home and dry! you also need to try hard to bring it to over 50% of repayment going towards paying the loan principal not interest! Question: Do Banks usually allow "irregular" topups to your monthly payments, so that more principal is returned earlier? Say, month 1 you pay as usual. Then month two, you pay twice ur monthly figure etc etc? Or only lump sums can be used to reduce Principal figure. I know Saccos can be flexible. But Banks? @webish... my bank does allow early repayments of top-ups of ANY amount(SCB). I have had a roll taking loans and now mortgage. I have taken 3 loans for 5 years and managed to clear within a year when the deal went through. On top of the relief of getting rid of the loan, I get a refund on the insurance amount (a milli paid within the year gets me back about 40K)
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Rank: Member Joined: 10/19/2009 Posts: 671 Location: Nairobi
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kiwaru wrote:
@webish... my bank does allow early repayments of top-ups of ANY amount(SCB). I have had a roll taking loans and now mortgage. I have taken 3 loans for 5 years and managed to clear within a year when the deal went through. On top of the relief of getting rid of the loan, I get a refund on the insurance amount (a milli paid within the year gets me back about 40K)
good for you. all the best in that.
Life is joy, death is peace, but the transition is very difficult.
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Rank: Hello Joined: 9/11/2014 Posts: 1
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 well while a mortgage is painfully expensive and with low returns i support the approach of a house loan first- security especially for family is important then you can venture into the stock. Your 25% statistics are on the high side or am i missing it?
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Rank: New-farer Joined: 3/1/2014 Posts: 82
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Useful link to do your math http://2ishi.com/buy-vs-rent.php “The beauty of success is that it doesn’t matter how many times you have failed, you only have to be right once and then everyone can tell you how lucky you are.” - Mark Cuban
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Rank: Veteran Joined: 7/3/2007 Posts: 1,635
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kiwaru wrote:Just paid the first instalment into a 25 year old home loan (aka slow death). My reasons for going into mortgage:
1. Peace of mind... since my family must live somewhere, it had better be in MY HOUSE
2. Expense savings: initially an oxy-moron since 96% of the premiums go to interest payment. But the mortgage is 150% of the rent for that hse after raising 15%.
In my previous house I noticed that rent had doubled in about 5 years. So I am thinking long term here
3. Capital appreciation: with the estimated 12% annual capital appreciation, I am building equity that am living in, and I can tap into for whatever
Disclaimer: I am praying to God and i have every intention of clearing the loan before term (every 80% of premiums paid in advance eliminates 11 installments (direct savings)
Wish me luck What you call slow death may turn out to be the best decision you have ever made. Many people, and I am one of them, can never save unless we are forced to. Over time the interest paid turns out to be a bargain, certainly compared to the 'interest' we give to KBL products. And, as you have noted, you are building equity. Most important, you are buying peace of mind, a good deal at any price. "The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth." (Niels Bohr)
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Rank: Elder Joined: 3/29/2011 Posts: 2,242
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Wakanyugi wrote:kiwaru wrote:Just paid the first instalment into a 25 year old home loan (aka slow death). My reasons for going into mortgage:
1. Peace of mind... since my family must live somewhere, it had better be in MY HOUSE
2. Expense savings: initially an oxy-moron since 96% of the premiums go to interest payment. But the mortgage is 150% of the rent for that hse after raising 15%.
In my previous house I noticed that rent had doubled in about 5 years. So I am thinking long term here
3. Capital appreciation: with the estimated 12% annual capital appreciation, I am building equity that am living in, and I can tap into for whatever
Disclaimer: I am praying to God and i have every intention of clearing the loan before term (every 80% of premiums paid in advance eliminates 11 installments (direct savings)
Wish me luck What you call slow death may turn out to be the best decision you have ever made. Many people, and I am one of them, can never save unless we are forced to. Over time the interest paid turns out to be a bargain, certainly compared to the 'interest' we give to KBL products. And, as you have noted, you are building equity. Most important, you are buying peace of mind, a good deal at any price. @Kiwaru, That's what ecomomists call utility- the value you derive from usage. It cannot be easily valued and even if in cash terms you pay an arm and a leg, the happiness derived is priceless. I find capital appreciation for residential property relative though. It does not make much sense for example if your home appreciated by lets say 500% and then you dispose it,the price of an alternative home with the same facilities may be more or less the price you dispose yours at. "Things that matter most must never be at the mercy of things that matter least." Goethe
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Rank: Elder Joined: 6/23/2009 Posts: 14,318 Location: nairobi
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webish wrote:Gordon Gekko wrote:Joshua Oigara at Mindspeak today, 'I took a mortgage a while back and it was a very painful experience. In retrospect it is one of the wisest decisions I've ever taken.' Must have humbled him. but came out wiser...  Captains of industry can clear a 4million mortgage in 2 months!!! thats not a good example to quote COOP, IMH, KEGN, KQ, MTNU
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Rank: Elder Joined: 7/11/2012 Posts: 5,222
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Gathige wrote:Wakanyugi wrote:kiwaru wrote:Just paid the first instalment into a 25 year old home loan (aka slow death). My reasons for going into mortgage:
1. Peace of mind... since my family must live somewhere, it had better be in MY HOUSE
2. Expense savings: initially an oxy-moron since 96% of the premiums go to interest payment. But the mortgage is 150% of the rent for that hse after raising 15%.
In my previous house I noticed that rent had doubled in about 5 years. So I am thinking long term here
3. Capital appreciation: with the estimated 12% annual capital appreciation, I am building equity that am living in, and I can tap into for whatever
Disclaimer: I am praying to God and i have every intention of clearing the loan before term (every 80% of premiums paid in advance eliminates 11 installments (direct savings)
Wish me luck What you call slow death may turn out to be the best decision you have ever made. Many people, and I am one of them, can never save unless we are forced to. Over time the interest paid turns out to be a bargain, certainly compared to the 'interest' we give to KBL products. And, as you have noted, you are building equity. Most important, you are buying peace of mind, a good deal at any price. @Kiwaru, That's what ecomomists call utility- the value you derive from usage. It cannot be easily valued and even if in cash terms you pay an arm and a leg, the happiness derived is priceless. I find capital appreciation for residential property relative though. It does not make much sense for example if your home appreciated by lets say 500% and then you dispose it,the price of an alternative home with the same facilities may be more or less the price you dispose yours at. If you have surplus, after paying the mortgage... build! In a year or two, you might have finished building your house, then you can decide what to do with either one you are in, or one you've built...
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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obiero wrote:webish wrote:Gordon Gekko wrote:Joshua Oigara at Mindspeak today, 'I took a mortgage a while back and it was a very painful experience. In retrospect it is one of the wisest decisions I've ever taken.' Must have humbled him. but came out wiser... Captains of industry can clear a 4million mortgage in 2 months!!! thats not a good example to quote Word... possunt quia posse videntur
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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maka wrote:obiero wrote:webish wrote:Gordon Gekko wrote:Joshua Oigara at Mindspeak today, 'I took a mortgage a while back and it was a very painful experience. In retrospect it is one of the wisest decisions I've ever taken.' Must have humbled him. but came out wiser... Captains of industry can clear a 4million mortgage in 2 months!!! thats not a good example to quote Word... Josh was talking about his life pre-KCB and pre-Bamburi days.
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Is Taking a Mortgage the WORST Decision Ever??
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