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Is Taking a Mortgage the WORST Decision Ever??
Rank: Elder Joined: 7/11/2010 Posts: 5,040
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bengraham wrote:Real Estate Woes-the secret lives of house poor canadians http://www.cbc.ca/news/b...oor-canadians-1.3086793 Could this phenomenon also be at play in our Kenyan scenario? i.e. Kenyans with mortgages for their "dream" homes that are costing them every drop of blood and hence they cannot afford unexpected shocks like an increase in expenses or increase in interest rates. Could it be that some of the nairobians living in leafy suburbs in 15m shilling apartments and the like are really living the secret lives of the house poor? Considering that this is happening in a country with low mortgage rates, we can conclude that this is happening to majority of the mortgage holders in our country. With the average incomes and the high rates that can be the most likely outcome. The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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Mortgage owners must be shitting their pants now. But its for a short time. things return to normal after the tight liquidity market is alleviated. For a mortgage, as long as the interest component of the monthly payment is below the rent, then you are good as like rental outflows, you will never recover them. Payments to capital component are equivalent to savings "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Obi 1 Kanobi wrote:Mortgage owners must be shitting their pants now. But its for a short time. things return to normal after the tight liquidity market is alleviated.
For a mortgage, as long as the interest component of the monthly payment is below the rent, then you are good as like rental outflows, you will never recover them. Payments to capital component are equivalent to savings In which part of this country or bank does this happen? If Obiero did it, Who Am I?
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Rank: Elder Joined: 6/23/2009 Posts: 13,517 Location: nairobi
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Swenani wrote:Obi 1 Kanobi wrote:Mortgage owners must be shitting their pants now. But its for a short time. things return to normal after the tight liquidity market is alleviated.
For a mortgage, as long as the interest component of the monthly payment is below the rent, then you are good as like rental outflows, you will never recover them. Payments to capital component are equivalent to savings In which part of this country or bank does this happen? This thinking is lopsided and weird. When paying the interest you are doing it with hope of owning the property at some point, while rental outflows aid the dream of the landlord!
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: New-farer Joined: 10/28/2015 Posts: 47
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heri wrote:How can i get info on how various banks compare in terms of the rates they are offering for mortgages /loans?
Is that info available anywhere other than calling each bank? I totally share this frustration, and sometimes wonder if keeping this info hard-to-find is part of how they make money 
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Rank: Member Joined: 1/22/2015 Posts: 682
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bengraham wrote:Real Estate Woes-the secret lives of house poor canadians http://www.cbc.ca/news/b...oor-canadians-1.3086793 Could this phenomenon also be at play in our Kenyan scenario? i.e. Kenyans with mortgages for their "dream" homes that are costing them every drop of blood and hence they cannot afford unexpected shocks like an increase in expenses or increase in interest rates. Could it be that some of the nairobians living in leafy suburbs in 15m shilling apartments and the like are really living the secret lives of the house poor? Not only the apartments. Even many of the people living in mansions in Runda and the likes, built with cash are house poor. Nyumba ni expensive. Most people break bank to get one
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Rank: Member Joined: 6/17/2011 Posts: 129 Location: Nairobi
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I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k. I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. As long as you're going to be thinking anyway, think big
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. Did you take a 15 year Loan or a 15 year Mortgage?  Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 12/17/2009 Posts: 3,583 Location: Kenya
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TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. Must have been a very good a deal you got, 12km from cbd, and only 7m for plot and putting up a 4br + sq
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Rank: Elder Joined: 6/2/2011 Posts: 4,818 Location: -1.2107, 36.8831
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TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can.  So, Interest rate is 14% p.a. Principal is KShs. 7,000,000.00 and repayment period is 15 years (or 180 months). From simple calculation, you are supposed to pay KShs. 93,221.90 every month for 15 years. When you pay "LUMP SUMS" of KShs. 100,000.00 monthly, you are actually doing nothing. Receive with simplicity everything that happens to you.” ― Rashi
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. why do I find that to hard to believe? 12kms within CBD and the hs(mainsonnette) is currently going for 14M? Is that cost inclusive of the land acquisition ama you just buy the hse and carry it to your own plot? If Obiero did it, Who Am I?
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Rank: Member Joined: 1/20/2015 Posts: 489 Location: Nairobi
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Congrats for your development.........how were the six years that you would pay up to 100k as installments? i guess the most horrible years of your life, what would have happened assuming you died before finishing the loan repayment? all in all......cheers!! Enjoy every moment of your life, you never know when your time will come.
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Rank: Elder Joined: 6/2/2011 Posts: 4,818 Location: -1.2107, 36.8831
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UpcomingPaperChaser wrote:Congrats for your development.........how were the six years that you would pay up to 100k as installments? i guess the most horrible years of your life, what would have happened assuming you died before finishing the loan repayment? all in all......cheers!! Boss, that guy has either given us half info or lied to us. If you repay the KShs. 7,000,000.00 at 14% p.a interest rate and 6 years, the instalments will be KShs. 144,240.18. Receive with simplicity everything that happens to you.” ― Rashi
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Rank: Member Joined: 6/17/2011 Posts: 129 Location: Nairobi
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Swenani wrote:TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. why do I find that to hard to believe? 12kms within CBD and the hs(mainsonnette) is currently going for 14M? Is that cost inclusive of the land acquisition ama you just buy the hse and carry it to your own plot? yes, in fact it is 11kms to be precise. The plots are not that big about 70 by 40 and about 300 m off Msa road. The cost of the plot in Jan 2010 when I bought it was 2.7 M and I used the balance of 4.3 M to construct. As long as you're going to be thinking anyway, think big
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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dunkang wrote:TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. So, Interest rate is 14% p.a. Principal is KShs. 7,000,000.00 and repayment period is 15 years (or 180 months). From simple calculation, you are supposed to pay KShs. 93,221.90 every month for 15 years. When you pay "LUMP SUMS" of KShs. 100,000.00 monthly, you are actually doing nothing. There are some loopholes here! So its a 40% (literally) gain or appreciation from 2010 cumulated. Okay. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Member Joined: 6/17/2011 Posts: 129 Location: Nairobi
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UpcomingPaperChaser wrote:Congrats for your development.........how were the six years that you would pay up to 100k as installments? i guess the most horrible years of your life, what would have happened assuming you died before finishing the loan repayment? all in all......cheers!! These were the most challenging times of my life so far - you have to kazana like crazy to prepay. No non-essential expenditure. Kuscco requires you to take a life assurance policy so in case am not there the insurance company pays the loan balance. As long as you're going to be thinking anyway, think big
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Rank: Member Joined: 1/20/2015 Posts: 489 Location: Nairobi
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TPK wrote:Swenani wrote:TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. why do I find that to hard to believe? 12kms within CBD and the hs(mainsonnette) is currently going for 14M? Is that cost inclusive of the land acquisition ama you just buy the hse and carry it to your own plot? yes, in fact it is 11kms to be precise. The plots are not that big about 70 by 40 and about 300 m off Msa road. The cost of the plot in Jan 2010 when I bought it was 2.7 M and I used the balance of 4.3 M to construct. His story seems to make some sense........a 4 bed maisonette with a SQ for 4.3 is possible, considering several factors. Maybe the building isnt of extremely classy finishes as they are so costly. Secondly, maybe he never used a contractor to build, but rather, he was the site supervisor himself. The other thing is that maybe he had his own old pick up for transporting all the building materials to the site. I agree. But issue ni how you settled the 7 million loan!! the lumpsum you talk about maybe was one major lumpsum, of say 1 million!!! but normally.........i know life must have been so hard for you!! You could no even afford to visit Karumaindo on Friday evenings! Enjoy every moment of your life, you never know when your time will come.
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Rank: Member Joined: 6/17/2011 Posts: 129 Location: Nairobi
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dunkang wrote:UpcomingPaperChaser wrote:Congrats for your development.........how were the six years that you would pay up to 100k as installments? i guess the most horrible years of your life, what would have happened assuming you died before finishing the loan repayment? all in all......cheers!! Boss, that guy has either given us half info or lied to us. If you repay the KShs. 7,000,000.00 at 14% p.a interest rate and 6 years, the instalments will be KShs. 144,240.18. You did not read my first message carefully. If you are prepaying the loan, then you should not assume the repayment of principal is constant when determining total amount paid. As long as you're going to be thinking anyway, think big
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Rank: Member Joined: 6/17/2011 Posts: 129 Location: Nairobi
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UpcomingPaperChaser wrote:TPK wrote:Swenani wrote:TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. why do I find that to hard to believe? 12kms within CBD and the hs(mainsonnette) is currently going for 14M? Is that cost inclusive of the land acquisition ama you just buy the hse and carry it to your own plot? yes, in fact it is 11kms to be precise. The plots are not that big about 70 by 40 and about 300 m off Msa road. The cost of the plot in Jan 2010 when I bought it was 2.7 M and I used the balance of 4.3 M to construct. His story seems to make some sense........a 4 bed maisonette with a SQ for 4.3 is possible, considering several factors. Maybe the building isnt of extremely classy finishes as they are so costly. Secondly, maybe he never used a contractor to build, but rather, he was the site supervisor himself. The other thing is that maybe he had his own old pick up for transporting all the building materials to the site. I agree. But issue ni how you settled the 7 million loan!! the lumpsum you talk about maybe was one major lumpsum, of say 1 million!!! but normally.........i know life must have been so hard for you!! You could no even afford to visit Karumaindo on Friday evenings! I used an experienced foreman (he had to show me 4 other similar houses he had done) and we agreed on a daily rate. I was the one to source and supply him with materials. I did not want to engage a contractor as they tend to hurry and compromise quality. A daily rate ensured that he was assured of a job for about 5 months (the time it took to finish construction)so he could focus on quality works. Life was tough (but not very) since I Could occassionally take my Friday Tusker and take Missus and kids out for dinner . As long as you're going to be thinking anyway, think big
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Rank: Member Joined: 1/20/2015 Posts: 489 Location: Nairobi
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TPK wrote:UpcomingPaperChaser wrote:TPK wrote:Swenani wrote:TPK wrote:I took a Kshs 7 Million 15 year plot purchase and construction loan from Kuscco Housing Fund in Jan 2010 at a fixed interest rate of 14% and constructed a 4 br maisonette+SQ within 12 kms of CBD. I was not going to sit and wait for the loan to run the full tenor as I was scared of the interest payments, so I had to make lumpsum prepayments of whatever amounts even 100k.
I just cleared it last month and in total, I have paid slightly over 10 m over the 6 year period. The current selling price of the house is about 14 M. Who says a mortage does not make sense? Just ensure you look for the right financier who will not hike rates any howly and ensure you prepay as much as you can. why do I find that to hard to believe? 12kms within CBD and the hs(mainsonnette) is currently going for 14M? Is that cost inclusive of the land acquisition ama you just buy the hse and carry it to your own plot? yes, in fact it is 11kms to be precise. The plots are not that big about 70 by 40 and about 300 m off Msa road. The cost of the plot in Jan 2010 when I bought it was 2.7 M and I used the balance of 4.3 M to construct. His story seems to make some sense........a 4 bed maisonette with a SQ for 4.3 is possible, considering several factors. Maybe the building isnt of extremely classy finishes as they are so costly. Secondly, maybe he never used a contractor to build, but rather, he was the site supervisor himself. The other thing is that maybe he had his own old pick up for transporting all the building materials to the site. I agree. But issue ni how you settled the 7 million loan!! the lumpsum you talk about maybe was one major lumpsum, of say 1 million!!! but normally.........i know life must have been so hard for you!! You could no even afford to visit Karumaindo on Friday evenings! I used an experienced foreman (he had to show me 4 other similar houses he had done) and we agreed on a daily rate. I was the one to source and supply him with materials. I did not want to engage a contractor as they tend to hurry and compromise quality. A daily rate ensured that he was assured of a job for about 5 months (the time it took to finish construction)so he could focus on quality works. Life was tough (but not very) since I Could occassionally take my Friday Tusker and take Missus and kids out for dinner . All in all, congratulations for that achievement. its no mean feat........enjoy life free from the landlord!! Enjoy every moment of your life, you never know when your time will come.
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Is Taking a Mortgage the WORST Decision Ever??
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