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10-12M mortgage
Rank: Member Joined: 3/26/2012 Posts: 280
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Other areas Doonholm; Tassia Ayany etc Bungalows with big compounds. DOH
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Rank: Elder Joined: 2/16/2007 Posts: 2,114
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Bachuma Gate wrote:I wouldnt accelerate payments if the job is secure n salo okay. You will miss out on the concessional interest. Do an excel work out.
Having said that; go for not so mordern house but on a big compound. Eg Otiende; kimathi east. In future you can demolish the house and build flats. Will there always be a demand for flats?Will the demand always be exponential vis-a-vis the supply?
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Rank: New-farer Joined: 2/14/2015 Posts: 97 Location: Kenya
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Chaka wrote:Bachuma Gate wrote:I wouldnt accelerate payments if the job is secure n salo okay. You will miss out on the concessional interest. Do an excel work out.
Having said that; go for not so mordern house but on a big compound. Eg Otiende; kimathi east. In future you can demolish the house and build flats. Will there always be a demand for flats?Will the demand always be exponential vis-a-vis the supply? The growth of urban population is exponential. The growth of housing (flats, maisonettes, bungalows) is low compared to demand. But currently, there may be flats not occupied because people's incomes do not allow them to afford certain rental properties. With a growing economy and family incomes - demand for rental properties will be there in foreseeable future.
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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FRM2011 wrote:Boss at 3% you don't even need a calculator. You are getting free money (inflation @7%).
Another sweetener, mortgage relief of up to 12,500 deductible from taxable income.
If your employer can agree to effect the above at source, your monthly interest charge drops by another 4k.
However, you need to find out who caters for the fringe benefit tax I.e. the difference between what you are paying in interest and what kra thugs usually call the fringe benefit tax rate. It's usually announced quarterly and it's the average of 91-day t bill rate for the preceding quarter. I am told there is no tax relief. That the interest rate is too low. "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Bachuma Gate wrote:I wouldnt accelerate payments if the job is secure n salo okay. You will miss out on the concessional interest. Do an excel work out.
Having said that; go for not so mordern house but on a big compound. Eg Otiende; kimathi east. In future you can demolish the house and build flats. A nice angle to it..Thanks "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: New-farer Joined: 10/16/2014 Posts: 33
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Agreed. 3% interest rate is a real bargain.
You could go for a standalone house on a big compound. 1/4, 1/2 etc in a satellite town around Nairobi. Instead of renting, you could move in and use the rest of the land for some income generating business e.g farming or with time build some rental units.
In future even if you were to dispose to pay off the mortgage, you can subdivide, sell off the house and still have some land remaining where you could build own house etc.
An apartment would not give you those options.
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Rank: Member Joined: 9/11/2015 Posts: 242 Location: Thika
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dpmungai wrote:Agreed. 3% interest rate is a real bargain.
You could go for a standalone house on a big compound. 1/4, 1/2 etc in a satellite town around Nairobi. Instead of renting, you could move in and use the rest of the land for some income generating business e.g farming or with time build some rental units.
In future even if you were to dispose to pay off the mortgage, you can subdivide, sell off the house and still have some land remaining where you could build own house etc.
An apartment would not give you those options.
This guy is right. I never quite understand why people buy overpriced apartments in Kenya. You are better off buying land with the money and building a bungalow. You OWN the land and can utilize it however you want. Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: Veteran Joined: 12/4/2009 Posts: 1,982 Location: matano manne
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T9,
Please note the interest rate is 5% being made of 3% GOK offering and 2% bank administration charges.
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Rahatupu wrote:T9,
Please note the interest rate is 5% being made of 3% GOK offering and 2% bank administration charges. My employer covers the 2%. There is also stamp duty, legal fees and some other one off charges. "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Veteran Joined: 12/4/2009 Posts: 1,982 Location: matano manne
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tnai9 wrote:Rahatupu wrote:T9,
Please note the interest rate is 5% being made of 3% GOK offering and 2% bank administration charges. My employer covers the 2%. There is also stamp duty, legal fees and some other one off charges. . Really? Impressive go for it. (pls don't forget to share kwa inbox)
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Rank: Member Joined: 1/20/2015 Posts: 489 Location: Nairobi
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Being a realist, assuming that some muggers decide to send a bullet through your head for no apparent reason, or by bad chance, you get an accident or get sick and die? your wife and kids will be dispossessed of the house and they will suffer! Mortgage insurance isn't worth the risk by most insurance companies in Kenya, i tend to think. It would not be prudent to tie yourself for the next 15 years paying a loan, 60k isnt little money by the way!! Assuming your name gets dragged into a scandal or anything happens and you are fired from being a civil servant and you lose your job? Automatically your interest rates rises to 22% kama ya mafans!! Its so bad knowing that you owe someone 60k every month from Jan 2017 to Dec 2032, for instance!! My advise with your current savings, take a smaller loan, maybe 2m and top up and slowly build your dream house without pressure or speed. the advantage of building your own house is that you get to customize it the way you want it, design, color, size and everything. For instance, almost all the house i see in Nairobi, all the bedrooms are clustered together on the upper floor with doors facing each other.......I would not locate my bedroom next to my childrens bedroom at any cost. Never ever. Going though this route will help you a great deal. You will build a house of your design over a period that you are comfortable with, depending on your cash flows. You will not be under any pressures even in case of acute disability or disease, you will not be scared! Dont buy these Nairobi houses, very poorly designed......very small windows like you are in prison........ #my2cents# Enjoy every moment of your life, you never know when your time will come.
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Rank: New-farer Joined: 10/16/2014 Posts: 33
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UpcomingPaperChaser wrote:Being a realist, assuming that some muggers decide to send a bullet through your head for no apparent reason, or by bad chance, you get an accident or get sick and die? your wife and kids will be dispossessed of the house and they will suffer! Mortgage insurance isn't worth the risk by most insurance companies in Kenya, i tend to think. It would not be prudent to tie yourself for the next 15 years paying a loan, 60k isnt little money by the way!! Assuming your name gets dragged into a scandal or anything happens and you are fired from being a civil servant and you lose your job? Automatically your interest rates rises to 22% kama ya mafans!! Its so bad knowing that you owe someone 60k every month from Jan 2017 to Dec 2032, for instance!!
My advise with your current savings, take a smaller loan, maybe 2m and top up and slowly build your dream house without pressure or speed. the advantage of building your own house is that you get to customize it the way you want it, design, color, size and everything. For instance, almost all the house i see in Nairobi, all the bedrooms are clustered together on the upper floor with doors facing each other.......I would not locate my bedroom next to my childrens bedroom at any cost. Never ever.
Going though this route will help you a great deal. You will build a house of your design over a period that you are comfortable with, depending on your cash flows. You will not be under any pressures even in case of acute disability or disease, you will not be scared!
Dont buy these Nairobi houses, very poorly designed......very small windows like you are in prison........
#my2cents# UpcomingPaperChaser, the route proposed is fine only that 3% is too attractive to pass by, 'free money'. Mortgage insurance can cover the mortgage in case of loss of life/disability/income and the bank will not come after the wife and kids. Actually, the family will have a debt free home. If in future the mortgage goes to market rate, he has the option of selling off the property and chances are it will have appreciated in value + the principal amount will be less. The amount on top can then be used to buy some land somewhere and build his dream home.
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Rank: Elder Joined: 7/28/2015 Posts: 9,562 Location: Rodi Kopany, Homa Bay
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dpmungai wrote:UpcomingPaperChaser wrote:Being a realist, assuming that some muggers decide to send a bullet through your head for no apparent reason, or by bad chance, you get an accident or get sick and die? your wife and kids will be dispossessed of the house and they will suffer! Mortgage insurance isn't worth the risk by most insurance companies in Kenya, i tend to think. It would not be prudent to tie yourself for the next 15 years paying a loan, 60k isnt little money by the way!! Assuming your name gets dragged into a scandal or anything happens and you are fired from being a civil servant and you lose your job? Automatically your interest rates rises to 22% kama ya mafans!! Its so bad knowing that you owe someone 60k every month from Jan 2017 to Dec 2032, for instance!!
My advise with your current savings, take a smaller loan, maybe 2m and top up and slowly build your dream house without pressure or speed. the advantage of building your own house is that you get to customize it the way you want it, design, color, size and everything. For instance, almost all the house i see in Nairobi, all the bedrooms are clustered together on the upper floor with doors facing each other.......I would not locate my bedroom next to my childrens bedroom at any cost. Never ever.
Going though this route will help you a great deal. You will build a house of your design over a period that you are comfortable with, depending on your cash flows. You will not be under any pressures even in case of acute disability or disease, you will not be scared!
Dont buy these Nairobi houses, very poorly designed......very small windows like you are in prison........
#my2cents# UpcomingPaperChaser, the route proposed is fine only that 3% is too attractive to pass by, 'free money'. Mortgage insurance can cover the mortgage in case of loss of life/disability/income and the bank will not come after the wife and kids. Actually, the family will have a debt free home. If in future the mortgage goes to market rate, he has the option of selling off the property and chances are it will have appreciated in value + the principal amount will be less. The amount on top can then be used to buy some land somewhere and build his dream home. I thought the property will be charged to the bank during the mortgage period, and therefore only the bank can sell it, not him.
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Just some more information, the civil service is a bit understanding, there is also the insurance option which I suppose is mandatory for all mortgages to cover against death/permanent disability(will confirm though). If I resign from my job, the rate will go up to 10% for the next one year. After that is when my employer will push me to finalize the mortgage. In one year I believe one can manage to get a buyer(this is what I term as understanding) or the balance if its not too huge. I know of a guy who got up to 18 months finalizing his mortgage. "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Elder Joined: 6/19/2008 Posts: 4,268
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hardwood wrote:dpmungai wrote:UpcomingPaperChaser wrote:Being a realist, assuming that some muggers decide to send a bullet through your head for no apparent reason, or by bad chance, you get an accident or get sick and die? your wife and kids will be dispossessed of the house and they will suffer! Mortgage insurance isn't worth the risk by most insurance companies in Kenya, i tend to think. It would not be prudent to tie yourself for the next 15 years paying a loan, 60k isnt little money by the way!! Assuming your name gets dragged into a scandal or anything happens and you are fired from being a civil servant and you lose your job? Automatically your interest rates rises to 22% kama ya mafans!! Its so bad knowing that you owe someone 60k every month from Jan 2017 to Dec 2032, for instance!!
My advise with your current savings, take a smaller loan, maybe 2m and top up and slowly build your dream house without pressure or speed. the advantage of building your own house is that you get to customize it the way you want it, design, color, size and everything. For instance, almost all the house i see in Nairobi, all the bedrooms are clustered together on the upper floor with doors facing each other.......I would not locate my bedroom next to my childrens bedroom at any cost. Never ever.
Going though this route will help you a great deal. You will build a house of your design over a period that you are comfortable with, depending on your cash flows. You will not be under any pressures even in case of acute disability or disease, you will not be scared!
Dont buy these Nairobi houses, very poorly designed......very small windows like you are in prison........
#my2cents# UpcomingPaperChaser, the route proposed is fine only that 3% is too attractive to pass by, 'free money'. Mortgage insurance can cover the mortgage in case of loss of life/disability/income and the bank will not come after the wife and kids. Actually, the family will have a debt free home. If in future the mortgage goes to market rate, he has the option of selling off the property and chances are it will have appreciated in value + the principal amount will be less. The amount on top can then be used to buy some land somewhere and build his dream home. I thought the property will be charged to the bank during the mortgage period, and therefore only the bank can sell it, not him. The first part of your statement is correct, but the second one can vary depending on the relationship with the banker. You can negotiate with a bank to get a buyer who buys at a higher rate. The Bank offsets the loan and give you the rest of the money. Actually, if you can get that buyer and the Bank refuses to sell to him/her and it proceeds to dispose off your property at a lower price, you can sue the bank for the difference of the money that you would have gotten from the market. Of course you have to prove the buyer was willing and able to buy at you claimed price.
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Rank: Member Joined: 2/4/2016 Posts: 175 Location: Global
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tnai9 wrote:Just some more information, the civil service is a bit understanding, there is also the insurance option which I suppose is mandatory for all mortgages to cover against death/permanent disability(will confirm though). If I resign from my job, the rate will go up to 10% for the next one year. After that is when my employer will push me to finalize the mortgage. In one year I believe one can manage to get a buyer(this is what I term as understanding) or the balance if its not too huge. I know of a guy who got up to 18 months finalizing his mortgage. Are this the cash backed govt mortgages for civil servants? Go for it.Buy a house in a big compound as advised somewhere.The rate remains at 3% even if you leave employment so long as you do not default. Get your valuer to exergerate the value abit so that you get some extra cash to do bizna and speed up the payment.The credit life insurance will take care of loss of life.
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Rank: Member Joined: 9/14/2011 Posts: 834 Location: nairobi
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Obi 1 Kanobi wrote:Its a no brainer, take the mortgage quick quick.
The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment. @Obi, i have never looked at it this way. I always check if the rent income will cover both the loan interest and the principal repayment.
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Rank: Chief Joined: 5/9/2007 Posts: 13,095
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Obi 1 Kanobi wrote:Its a no brainer, take the mortgage quick quick.
The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment.  Interesting.
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Rank: Veteran Joined: 8/30/2007 Posts: 1,558 Location: Nairobi
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I would take the mortgage but know that its a buyers market currently depending on the area.
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Rank: Elder Joined: 6/23/2009 Posts: 13,472 Location: nairobi
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heri wrote:Obi 1 Kanobi wrote:Its a no brainer, take the mortgage quick quick.
The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment. @Obi, i have never looked at it this way. I always check if the rent income will cover both the loan interest and the principal repayment. Even at an interest rate of 6% the rental income will not cover principal plus interest
HF 428,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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