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Barclays Home Loan...what to do?
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Horton
#11 Posted : Monday, August 30, 2010 6:19:09 PM
Rank: Veteran

Joined: 8/30/2007
Posts: 1,558
Location: Nairobi
Stanchart home loans are a better deal at 10.95%
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Mkimwa
#12 Posted : Monday, August 30, 2010 6:33:03 PM
Rank: Member

Joined: 10/26/2008
Posts: 380
leona wrote:
The Big question is:
Should people continue paying rent to landlords OR take home loans and own their own homes?


Rephrase:

Should people continue paying Rent to landlords, OR paying interest to banks?
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My 2 cents
#13 Posted : Tuesday, August 31, 2010 10:41:33 AM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,091
mukiha wrote:
My 2 cents wrote:
leona wrote:
The Big question is:
Should people continue paying rent to landlords OR take home loans and own their own homes?

It is the cost that is an issue. rent on nyayo embakasi flats is 20k and mortgage is 56k. my view is that instead of buying on mortgage one should rent and invest the rest. If they are disciined one day they can buy a home on cash basis or borrow very little. This way tons of interest can be avoided.

@My 2 Cents;
Have you factored-in the price appreciation of houses? And also the ever-rising rents?

Experience has shown me that rent in Nairobi doubles every 7 - 10 years. Thus expect the 20k flat to cost about 40k by 2020.

BTW, is this the New Nyayo Embakassi old the older one? I know that the first phase mortgage is Sh28,341 exactly and that's where you cane get 20k - 25k rent, depending on you negotiation skill.

These houses were fetching 12k - 15k rent in 2002....but the mortgage was still the same Sh28,341.

People assume that it is easy to save for a house and pay for it in cash and they forget two things:
FIRST; that it is very difficult to muster enough discipline to save, and
SECOND: that the prices of houses are also increasing.

Let me illustrate with my own personal experience:

In 2002, I signed up for a mortgage to buy the flat below the one I was living in. I had been paying Sh16k rent. The purchase cost was sh2.5m and the the mortgage installments came to Sh31k pm.

Today, the rent for the area averages 30k - 35k, but the mortgage is still 31k.

My eighbour recently sold her flat earlier this year for sh7.5m

In view of the above, taking a mortgage does make sense; doesn't it?

Well, I am glad it worked for you. I also paid for my flat in 2005 with 90% cash and the rest was a small unsecured loan paid off in one year. The reason I was able to do so was because for some years I paid lower rent and INVESTED like crazy. During a stockmarket boom, I was able to cash out and buy my home near cash. I did not make any bank richer by paying tons of interest. Though I do understand for many people who just cannot muster the discipline to save and invest every month, mortgage may be the only way to go; it works like forced investment. It is an expensive option in my assessment.
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My 2 cents
#14 Posted : Tuesday, August 31, 2010 10:45:12 AM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,091
@ Mukiha, shares appreciate much much faster than real estate. Do not let the recent boom in real estate cloud your judgement. Real Estate generally appreciates 4-6% p.a. in the long term as compared to 10% and above in shares.

Rents in Embakasi used to be 25k for a three bedroom flat; now with over supply you can get some for 20K per month. Just ask anyone who stays there or check the classified pages.
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bird_man
#15 Posted : Tuesday, August 31, 2010 11:28:59 AM
Rank: Veteran

Joined: 11/2/2006
Posts: 1,206
Location: Nairobi
My 2 Cents....I like your method though as it was correctly put, very few people have the discipline to save.About how much (percentage) of your monthly income did you save for investment purposes in shares?
Formally employed people often live their employers' dream & forget about their own.
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My 2 cents
#16 Posted : Tuesday, August 31, 2010 12:40:20 PM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,091
bird_man wrote:
My 2 Cents....I like your method though as it was correctly put, very few people have the discipline to save.About how much (percentage) of your monthly income did you save for investment purposes in shares?

Yes, it does need a lot of discipline to live way way below your means. I saved 50% of my net salary. I still do this to this day; I live on half of my salary.
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mjuaji wa stocks
#17 Posted : Tuesday, August 31, 2010 12:53:50 PM
Rank: Member

Joined: 1/16/2010
Posts: 672
Location: nairobi
@All...na mimi natafuta nyumba ya less than 1 million ya kununua...probably an old mabati or stone house ambayo nitai-custom to suit my needs!!

Natafuta laini ya kinoo; kikuyu mpaka huko limuru! Nakuru highway mpaka flyover ama naivasha.



Ama banana;denderu; kiambu ndani au any other outskirt town...leads are welcome.

any idea?

Nangoja....jameni saidia.

Think Think Think Think Think Think
God gave me the power to make wealth ... Blessed the work of my hands & enabled be A SELF MADE BILLIONAIRE ...... TO GOD THE FATHER OF MY LORD JESUS CHRIST; BE THE GLORY NOW & FOREVER MORE!
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Tito44
#18 Posted : Tuesday, August 31, 2010 1:01:01 PM
Rank: Member

Joined: 12/16/2008
Posts: 111
In my own view, mortgage is for those earning a "good" amount of money. Renting and saving for your own house works even if your monthly salary is not "so good". Therefore, it depends with individual circumstances and the goals one has.

I personally do not own a Nairobi house yet, though a commercial building is in progress (not in one of the 3 cities). By renting "low", i am able to save some amount towards my commercial venture. With time, i know i will own a house in one of the upmarket places. If not, at least i will be able to buy a plot and build. Either way, the end result is a home without putting too much strain on yourself.

Therefore, you need to consider your individual circumstances before going for the mortgage
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winston
#19 Posted : Tuesday, August 31, 2010 2:00:27 PM
Rank: Member

Joined: 4/14/2010
Posts: 806
Location: Nairobi
The secret to mortgages is to pay more than the statutory installment amount. That way you dont end up paying all the interest that you would paid if you paid statutory amount for the entire period and you finish your loan faster. But make sure the mortgage has early repayment option.

am 100% with @mukiha on this.

Those who want to save to buy cash will probably find the house purchase prices have increased at a faster rate than their savings.
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My 2 cents
#20 Posted : Tuesday, August 31, 2010 3:08:41 PM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,091
Tito44 wrote:
By renting "low", i am able to save some amount towards my commercial venture. With time, i know i will own a house in one of the upmarket places. If not, at least i will be able to buy a plot and build. Either way, the end result is a home without putting too much strain on yourself.


Way to go Applause
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