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Is Taking a Mortgage the WORST Decision Ever??
Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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UpcomingPaperChaser wrote: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!! The argument we had here is about a common mwananchi .first of all congratulation. I'll need tips and advice on later years. Having said that very few Kenyans can afford to pay 100k a month . I said earlier is possible only if you are an MPIG or someone who can afford to clear earlier. Majority of people I saw who were taking loans from banks for mortgage were wanjiku earning net of 80k and they were an employee somewhere. When will they make lumpsome of 100k a month and yet they have other bills? Also what bank is this you used who didn't slap you with interest rates hikes the way they felt like? There are some wazuans who wanted to know what's the most sensible and reasonable bank to take a mortgage with in kenya . Thanks
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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TPK 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!! 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. After you expire and the life assurer pays the balance of the loan, will the house then be given to your next of kin or who takes the house? Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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Impunity wrote:TPK 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!! 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. After you expire and the life assurer pays the balance of the loan, will the house then be given to your next of kin or who takes the house? That's the cycle of life bro. Even bill Gates will leave all his wealth for someone/ foundation who never sweat for it . You never go with anything back to soil .he he
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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TPK wrote: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. I think the loans, whether on a reducing balance or fixed is calculated so that every month you only pay a fixed sum of money...ama ni nini sielewi? Lets say the monthly calculated remittance was Kes. 95,000, then after the 3rd year you won the Bonyeza Osinde na Safcon worth Kes. 2 million, will the monthly rate now be lowered for say 65K pm payable for the remainder 12 years or you continue paying the monthly 95K but for say 6 years and finish? Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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enyands wrote:Impunity wrote:TPK 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!! 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. After you expire and the life assurer pays the balance of the loan, will the house then be given to your next of kin or who takes the house? That's the cycle of life bro. Even bill Gates will leave all his wealth for someone/ foundation who never sweat for it . You never go with anything back to soil .he he Then in that case thats a very dangerous precedent...no wonder Kiambu women have been taking their huzzies to Makueni year in year out! Like if she know you have mortgaged a 40 million home in the deep Karen near kina RAO and RUTO, and that you intend to pay for the next 25 years, and that she is the next of kin, and that you have already given her 2 lovely kids (with education policy), and that you intend to have them eating mboga and njahi and turungi for the next 25 years, and that you dont have any other floating income to invest in other cash generating activities... SHE WILL MAKUENI YOU ON THE 2ND YEAR AND LIVE POSHLY IN KAREN!!!Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: New-farer Joined: 4/8/2015 Posts: 42
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Impunity wrote:TPK wrote: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. I think the loans, whether on a reducing balance or fixed is calculated so that every month you only pay a fixed sum of money...ama ni nini sielewi? Lets say the monthly calculated remittance was Kes. 95,000, then after the 3rd year you won the Bonyeza Osinde na Safcon worth Kes. 2 million, will the monthly rate now be lowered for say 65K pm payable for the remainder 12 years or you continue paying the monthly 95K but for say 6 years and finish? @impunity The purpose of early repayment is to shorten the mortgage repayment period and reduce the overall cost. So a boost of 2m will not change the monthly repayments but will significantly reduce the total interest paid. In effect, the 2m is no longer being charged interest so you have "savings" of 14% of 2m = 280k p.a "accumulated" for the remaining duration of the loan
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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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. Very sad @dunkang. This guy is lying to us in broad daylight. For a 7,000,000 loan at a fixed rate of 14%, even if he was paying 100,000 from month one without fail, it would take 12 years to complete the loan. And he is talking about 6 years?? Half the time??? @TPK - If you are trying to prove a fact, don't use lies. Use facts and actual figures. Throwing around figures and the underestimating the payment period by half is not even remotely forgivable. Ile kitu wazuans wanajua sana ni hesabu!!! Kwanza hesabu za pesa!!! 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: 7/11/2010 Posts: 5,040
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MaichBlack wrote: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. Very sad @dunkang. This guy is lying to us in broad daylight. For a 7,000,000 loan at a fixed rate of 14%, even if he was paying 100,000 from month one without fail, it would take 12 years to complete the loan. And he is talking about 6 years?? Half the time??? @TPK - If you are trying to prove a fact, don't use lies. Use facts and actual figures. Throwing around figures and the underestimating the payment period by half is not even remotely forgivable. Ile kitu wazuans wanajua sana ni hesabu!!! Kwanza hesabu za pesa!!! He said even 100k. Meaning those were the least "lumpsums" he paid. Meaning most other times it was more. It's possible what he did, you just need a good income and financial discipline The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Member Joined: 1/20/2015 Posts: 489 Location: Nairobi
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To make sense out of this, maybe he tells us how much his disposable income was before the loan! Enjoy every moment of your life, you never know when your time will come.
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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@tpk kindlt what bank did you use . I want to go talk to them
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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Aguytrying wrote:MaichBlack wrote: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. Very sad @dunkang. This guy is lying to us in broad daylight. For a 7,000,000 loan at a fixed rate of 14%, even if he was paying 100,000 from month one without fail, it would take 12 years to complete the loan. And he is talking about 6 years?? Half the time??? @TPK - If you are trying to prove a fact, don't use lies. Use facts and actual figures. Throwing around figures and the underestimating the payment period by half is not even remotely forgivable. Ile kitu wazuans wanajua sana ni hesabu!!! Kwanza hesabu za pesa!!! He said even 100k. Meaning those were the least "lumpsums" he paid. Meaning most other times it was more. It's possible what he did, you just need a good income and financial discipline Makes for financial discipline & streamlines likages!!! In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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@Aguy - The problem is that this is a serious forum and decisions are normally made based on information obtained. The truth of the matter is that if he was paying the 100k he is quoting it would take him 12 years. He is quoting 6 years!! This is impossible and makes the whole story useless. He has quoted very specific figures on everything. Let him say how much he was paying per month to pay off the debt in 6 years. Alternatively he states how long it took him to pay the loan and stop hoodwinking wazuans. 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: Member Joined: 8/17/2007 Posts: 294
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MaichBlack wrote:@Aguy - The problem is that this is a serious forum and decisions are normally made based on information obtained.
The truth of the matter is that if he was paying the 100k he is quoting it would take him 12 years. He is quoting 6 years!! This is impossible and makes the whole story useless. He has quoted very specific figures on everything. Let him say how much he was paying per month to pay off the debt in 6 years. Alternatively he states how long it took him to pay the loan and stop hoodwinking wazuans. The guy is obviously not an employee with a fixed low income.. He's in business or farming and he gets bursts of money once in a while, say 400k which he uses to knock off the loan
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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instinct wrote:MaichBlack wrote:@Aguy - The problem is that this is a serious forum and decisions are normally made based on information obtained.
The truth of the matter is that if he was paying the 100k he is quoting it would take him 12 years. He is quoting 6 years!! This is impossible and makes the whole story useless. He has quoted very specific figures on everything. Let him say how much he was paying per month to pay off the debt in 6 years. Alternatively he states how long it took him to pay the loan and stop hoodwinking wazuans. The guy is obviously not an employee with a fixed low income.. He's in business or farming and he gets bursts of money once in a while, say 400k which he uses to knock off the loan @MB you misinterpreted his 100k repayment. Just reread that post. In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Member Joined: 5/31/2009 Posts: 226
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Mortgages works wonders. The one thing it does is that it holds down the price of the property as we all know prices keep doubling every 3years. The average price of a 3bedroom apartment in a decent place like Mombasa rd ruiru ,kikuyu, Thika is 7m up from 3.5m in 2011 A 3 bedroom town house in same area has shot up from 8m in 2011 to 13m now. I bought my apartment june 2014 for 4.25m of which i borrowed only 2.25m. I paid 400k as closing costs i have managed to pay 3 lumpsums of 450 500 and 350 in addition to the 40kx15years every month. Bal is now 790k. Not every 1 can afford the lumpsups but even if you just buy the house and loose your job in year 3 or 4 u can still sell it and get a cool 2m-4m profit and use it to build a house or start a business. Fyi the apartment can now fetch 5.5m quick sale
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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instinct wrote:MaichBlack wrote:@Aguy - The problem is that this is a serious forum and decisions are normally made based on information obtained.
The truth of the matter is that if he was paying the 100k he is quoting it would take him 12 years. He is quoting 6 years!! This is impossible and makes the whole story useless. He has quoted very specific figures on everything. Let him say how much he was paying per month to pay off the debt in 6 years. Alternatively he states how long it took him to pay the loan and stop hoodwinking wazuans. The guy is obviously not an employee with a fixed low income.. He's in business or farming and he gets bursts of money once in a while, say 400k which he uses to knock off the loan Let's assume he's paying 100k monthly so for 6yrs its 7.2 M.Balance is 3M which if equally spread over 6yrs is 500k annually (60k monthly) or whichever periodically. So the question is was he straining? Did he have an alternative of buying plot then constructing without a mortgage? Was the decision he made worse compared to other options? Personally i think He paid through his nose. Lazima Ilikuwa anakunywa maji na mahindi. It wasn't the better decision. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Veteran Joined: 8/25/2012 Posts: 1,826
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instinct wrote:MaichBlack wrote:@Aguy - The problem is that this is a serious forum and decisions are normally made based on information obtained.
The truth of the matter is that if he was paying the 100k he is quoting it would take him 12 years. He is quoting 6 years!! This is impossible and makes the whole story useless. He has quoted very specific figures on everything. Let him say how much he was paying per month to pay off the debt in 6 years. Alternatively he states how long it took him to pay the loan and stop hoodwinking wazuans. The guy is obviously not an employee with a fixed low income.. He's in business or farming and he gets bursts of money once in a while, say 400k which he uses to knock off the loan since he has not specified, we can just speculate, but he might be an employee. I don't know if the figures are correct but he states that he has paid in total around 10m in 6 years, translates to roughly 140k per month. assuming he was not on complete lockdown since he mentions taking the missus and the kids out, also assuming there are other bills, he could well be employed with a net of around 200k which is more common these days in Nairobi. or if he was following the 1/3 rule, that leaves him at around a net of 220k which is still very possible, especially if he works for the UN.
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Rank: Member Joined: 10/26/2008 Posts: 380
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TPK has clearly stated he finished it in 6 years, instead of 15 years. This is very possible, he has stated he made lumpsum payments which allowed him to fast track the loan. Now speculation is on whether he is an employee of UN and what his salary is, e.t.c. which does not add value to this discussion.
It is very possible to fast track those mortgages. I know of a family who cleared their mortgage in 4 years instead of 10 years. The family would put any money earned elsewhere into the mortgage, any bonus, any perdiem (however small, even 20-40K), money from raises at work place and it worked well.
The fact that you may not be in a position to fast track your mortgage, doesn't mean that others cannot. Its very much possible, give TPK a break. I think he has done well to explain his circumstances, and the info he gave matches.
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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Mkimwa wrote:TPK has clearly stated he finished it in 6 years, instead of 15 years. This is very possible, he has stated he made lumpsum payments which allowed him to fast track the loan. Now speculation is on whether he is an employee of UN and what his salary is, e.t.c. which does not add value to this discussion.
It is very possible to fast track those mortgages. I know of a family who cleared their mortgage in 4 years instead of 10 years. The family would put any money earned elsewhere into the mortgage, any bonus, any perdiem (however small, even 20-40K), money from raises at work place and it worked well.
The fact that you may not be in a position to fast track your mortgage, doesn't mean that others cannot. Its very much possible, give TPK a break. I think he has done well to explain his circumstances, and the info he gave matches. That first one means six years of total sacrifice The second one is a reality   . The mortgage makes sense if you're able to fast track payments in shortest period possible, I think 5yrs is ideal. But again other options should be considered. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Elder Joined: 3/18/2011 Posts: 12,069 Location: Kianjokoma
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TPK paid an amount P= x(loan repayment)+y(lumpsum, at least 100k) The guy needs to tell us what x is per month to settle this debate
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Is Taking a Mortgage the WORST Decision Ever??
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