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Is Taking a Mortgage the WORST Decision Ever??
Rank: Elder Joined: 7/22/2009 Posts: 7,455
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murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly No bank in Kenya will give you a fixed rate for 30 years! Not even for 5 years!!! The rate is always variable unless it is for a very short loan period and that is where the devil is!!! 30 million is if you are building rentals. But the amount does not matter. Even if you had taken a loan for 5 million, 1 million or 20 bob, your monthly repayment amount will go up by a bloody 54% if the period is not extended. If the period is extend, it is much worse in terms of interest repayments but at least your pain is spread over a long long period and you are less likely to default. But will pay even much more eventually!!! 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: Elder Joined: 7/22/2009 Posts: 7,455
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murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! 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: Elder Joined: 7/22/2009 Posts: 7,455
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Sevian wrote:I know someone who got an email from Stanchart notifying them of the increase of mortgage rates from 10.3 to 14.5%. They are paying 40% extra since. Hii mbiashara ya mortgage ni upuuus. How do you expect someone to cough an extra 40k (assuming they were paying 100k). This is exactly how people get auctioned!!! If the fellow is using his salary to pay, you can bet he has to make sacrifices to pay even the 100k. His budget must be extremely tight!! Then all over sudden you want him to pay an extra 40k! From where??? If he was renting out the house, it is most definitely worse. The rent must be lower than the 100k and the fellow must have been topping it up from his own salary while paying his own rent. Does he convince the tenant to pay an extra 40k in rent. Will never happen!!! 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: Elder Joined: 2/26/2012 Posts: 15,980
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MaichBlack wrote:murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! If the cost of leverage is passed to Mr Landlord, then he's about to pass the same to the one renting. "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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Mike Ock wrote:MaichBlack wrote:A 20 year 30 million loan at 17% interest rate has a monthly repayment of Kshs. 440,040/=.
Adjusting the same loan to 27% without changing the repayment period increases the monthly repayments to Kshs. 678,252/=. A 54% increment in monthly repayment amount (Though a casual eye might 'see' a 10% increment). Adjusting the payment period makes things worse in terms of interest payments but at least spreads out the pain over a long long time!!!
That is how fast you can get screwed!!! I view this as more of a failure of modern society. The city dwelling human is the only creature on this planet that slaves away for decades to do the most basic thing of building a home for himself. In rural areas and in the animal kingdom, that is a one week process and you move on! There are some areas where this so called progress of civilization has really failed humans, but what can you do... accept and move on I guess? Modern day slavery!!! In the older version of slavery, people were working for free but were given food and accommodation. Nowadays you work and are given barely enough to cover your food and accommodation - and a means to get to your work place! 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: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly he he he @ Murchr keeping up with the Joneses....man this is not interesting.... possunt quia posse videntur
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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murchr wrote:MaichBlack wrote:murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! If the cost of leverage is passed to Mr Landlord, then he's about to pass the same to the one renting. Will never happen - The tenants will move! Most landlords are NOT servicing mortgages so they are not affected! There are only about 20,000 mortgage accounts in Kenya - and those cover owner occupier, office buildings, rentals etc. What that means is that as a landlord with a mortgage, you might be the only one with a mortgage in that neighbourhood!!! If you increase the rent, you will do it alone. Next thing you know, you will have Zero tenants!!! 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: Elder Joined: 7/28/2015 Posts: 9,562 Location: Rodi Kopany, Homa Bay
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MaichBlack wrote:murchr wrote:MaichBlack wrote:murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! If the cost of leverage is passed to Mr Landlord, then he's about to pass the same to the one renting. Will never happen - The tenants will move! Most landlords are NOT servicing mortgages so they are not affected! There are only about 20,000 mortgage accounts in Kenya - and those cover owner occupier, office buildings, rentals etc. What that means is that as a landlord with a mortgage, you might be the only one with a mortgage in that neighbourhood!!! If you increase the rent, you will do it alone. Next thing you know, you will have Zero tenants!!! I disagree. Many landlords have loans in one form or another. And the increased cost will be passed to the tenants. Expect an exodus from kileleshwa to eastlands.
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Rank: Elder Joined: 12/4/2009 Posts: 10,684 Location: NAIROBI
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@hardwood Hiyo exodus won't be there.What will happen is luxuries will suffer. Domestic tourism at the coast,traffic at shopping malls in the food courts and designer shops as most people will now shift the money to catering for the basics Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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hardwood wrote:MaichBlack wrote:murchr wrote:MaichBlack wrote:murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! If the cost of leverage is passed to Mr Landlord, then he's about to pass the same to the one renting. Will never happen - The tenants will move! Most landlords are NOT servicing mortgages so they are not affected! There are only about 20,000 mortgage accounts in Kenya - and those cover owner occupier, office buildings, rentals etc. What that means is that as a landlord with a mortgage, you might be the only one with a mortgage in that neighbourhood!!! If you increase the rent, you will do it alone. Next thing you know, you will have Zero tenants!!! I disagree. Many landlords have loans in one form or another. And the increased cost will be passed to the tenants. Expect an exodus from kileleshwa to eastlands. When the rates were hiked in 2012, there was no cost passing to tenants and there was no exodus. If you are servicing a mortgage, utabeba mzigo peke yako!!! Trust me!!! If you were not in a position to increase the rent to cover the earlier mortgage payments (because you would definitely lose the tenants), what makes you think you will do it now - to a much higher amount and keep the tenants?? You think rents have always been lower than mortgage payments because landlords are stupid!? 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: Elder Joined: 9/19/2015 Posts: 2,871 Location: hapo
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And the bubble officially begins. Thieves are not good people. Tumeelewana?
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Rank: Chief Joined: 5/9/2007 Posts: 13,095
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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alma1 wrote:And the bubble officially begins. Suraya have been forced to reduce the asking prices of their houses. And now they have to deal with higher financing costs!!! Ni kubaya!!! 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: Elder Joined: 7/22/2009 Posts: 7,455
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alma1 wrote:And the bubble officially begins. Suraya have been forced to reduce the asking prices of their houses. And now they have to deal with higher financing costs!!! Ni kubaya!!! When was the last time a developer started selling houses at a certain price and then after some time reduced the price for the same houses because they are not being bought?? The price always rises after a certain number of units have been bought! 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: Elder Joined: 9/20/2015 Posts: 2,811 Location: Mombasa
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Is the real bear warming up? John 5:17 But Jesus replied, “My Father is always working, and so am I.”
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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alma1 wrote:And the bubble officially begins. Suraya have been forced to reduce the asking prices of their houses. And now they have to deal with higher financing costs!!! Ni kubaya!!! When was the last time a developer started selling houses at a certain price and then after some time reduced the price for the same houses because they are not being bought?? The price always rises after a certain number of units have been bought! 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: Elder Joined: 7/22/2009 Posts: 7,455
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alma1 wrote:And the bubble officially begins. Suraya have been forced to reduce the asking prices of their houses. And now they have to deal with higher financing costs!!! Ni kubaya!!! When was the last time a developer started selling houses at a certain price and then after some time reduced the price for the same houses because they are not being bought?? The price always rises after a certain number of units have been bought! 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: Veteran Joined: 1/3/2014 Posts: 1,063
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MaichBlack wrote:murchr wrote:MaichBlack wrote:murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! If the cost of leverage is passed to Mr Landlord, then he's about to pass the same to the one renting. Will never happen - The tenants will move! Most landlords are NOT servicing mortgages so they are not affected! There are only about 20,000 mortgage accounts in Kenya - and those cover owner occupier, office buildings, rentals etc. What that means is that as a landlord with a mortgage, you might be the only one with a mortgage in that neighbourhood!!! If you increase the rent, you will do it alone. Next thing you know, you will have Zero tenants!!! The demand for rental houses in Nairobi outweighs by far the supply and therefore the houses will still find tenants even with the increased rental fee. Consistency is better than intensity
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Rank: Member Joined: 2/7/2014 Posts: 155
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MaichBlack wrote:alma1 wrote:And the bubble officially begins. Suraya have been forced to reduce the asking prices of their houses. And now they have to deal with higher financing costs!!! Ni kubaya!!! When was the last time a developer started selling houses at a certain price and then after some time reduced the price for the same houses because they are not being bought?? The price always rises after a certain number of units have been bought! @MaichBlack, which Suraya units have had their prices reduced.This would be an interesting development.
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Rank: Elder Joined: 9/19/2015 Posts: 2,871 Location: hapo
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PeterReborn wrote:MaichBlack wrote:murchr wrote:MaichBlack wrote:murchr wrote:Boris Boyka wrote:murchr wrote:Kwani Mortgages are not on a fixed rate? And why the hell are you taking a 30M loan? That building better be giving you back 1M monthly NO, NEVER! fixed rate is used on Short term asset loans like machinery and commercial cars. Unless you are in these group of Kenyans you need not a 30M loan @murchr - See the post above!!! 30 million, 3 million or 300k, the story is the same! Monthly payments up 54% pap!!! If the cost of leverage is passed to Mr Landlord, then he's about to pass the same to the one renting. Will never happen - The tenants will move! Most landlords are NOT servicing mortgages so they are not affected! There are only about 20,000 mortgage accounts in Kenya - and those cover owner occupier, office buildings, rentals etc. What that means is that as a landlord with a mortgage, you might be the only one with a mortgage in that neighbourhood!!! If you increase the rent, you will do it alone. Next thing you know, you will have Zero tenants!!! The demand for rental houses in Nairobi outweighs by far the supply and therefore the houses will still find tenants even with the increased rental fee. I think your analysis is clouded in denial. Come over I'll show you some houses for 40k that have yet to get tenants. Please understand the current dynamics. People can live far from Nairobi and still be happy. Some of the costs in rental units are bizarre to say the least. 50k + in south c to live in a house with no water. While hapo athi river 35k. I know many who have moved leaving the spaces to walalos and wannabies. As for commercial property. Has anyone taken a walk into Westlands lately? Every corner is a new commercial property. Rents 100 bob per square foot. How many of these new properties coming up in Westlands are fully let? None! Even if its drug money, hiyo pia huisha. Watch commercial properties keenly in that area. With financing going up by 50% what do you think the rents shall be? Who shall rent them when they can work from home. This phenomenon is not new in Kenya. It has happened wordlwide. If you love property that much, don't do it with a loan. Utalia. Na wameanza kulia. As for over priced tuburotis. Home Afrika is not a fluke. I know for a fact that these buroti companies are selling less than last year. That is why Kageni is shouting every day about land ending sijui next year. Their marketing departments are in agony trying everything to sell them. Now they are on shosho mendia. Don't listen to hass consult. Just ask yourself if you are happy buying a 1/8th buroti for 5million. If you are, the bubble has yet to burst. Thieves are not good people. Tumeelewana?
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Is Taking a Mortgage the WORST Decision Ever??
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