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