Simple algebra. Since P is known and Y is also given find X.

@tpk kindlt what bank did you use . I want to go talk to them

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

No, he also need to tell us whether he works for the UN or Sells dope!

now this makes sense. Though you didn't day wussy bank you used

I am employed on a 8-5 pm job in the bean counting profession. However I started a side hustle (consultancy) at the same time of accessing the mortgage. The business took 3 years to stabilise and I can now say it one of the sources that really helped to generate the cash flows to support the lumpsum payments. We had to make adjustments as a family in that missus had to resign her full time secure (but not so well paying) job to run the side hustle and manage it on a day to day basis. Others are like foregoing a holiday in Dec and using year end bonus to prepay. The message is that you dont need to be an MP or pull a heist to get funds to prepay. When you are getting into a mortgage you must have a plan on how you will accelerate payments.

Exactly! Especially given the lumpsum payment amounted to 3.5 million. For a 7 million loan!!!

That is just a 3.5 million 6 year SACCO loan.

@TPK had to have saved with them a minimum of 1,750,000/= to borrow what technically ended up being a 3.5 million loan!!!

This tells you that most wazuans are just wealthy in their minds but cash poor,bank poor, asset poor and income poor, Leaving from paycheck to paycheck with support of Mshari,KCB mpesa and shylocks loans.Why do they think that for you to pay over 100K in loan you must be an mp or work for UN

@Swenani trust me, wazuans can pay. The only reason they are alarmed at the rates is because it's not a good deal

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?

No, he also need to tell us whether he works for the UN or Sells dope!

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.

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.

To make sense out of this, maybe he tells us how much his disposable income was before the loan!

My friends and I have been saving money together to build our own houses. However, after a lot of soul searching and consultation, I have come to the realization that building or buying my own house is not a priority at least till I turn about 40.
Let’s take arbitrary incomes and see what can be achieved at the respective ages
Age. Net pay kshs. Family
25. 50,000. Single
30. 100,000. New wed
35. 150,000. 1Kid
40. 200,000. 2, 3 kids

If you take a mortgage or construction loan before you turn 40, you might buy a house or build a house that might prove to be a liability.

This is why

A 2bedroom apartment in Athi River, Kitengela or Kiserian or Juja or Kikuyu will go for between 5 and 6 million. If you buy your own plot and build a house in the said areas you will spend roughly the same amount of money.

If you take a loan for the Kshs 5 million to buy or build a house today at the prevailing variable interest rates of about 18% PA you will be repaying about Kshs 78,000 per month for the next 20 years. Let’s assume that you can actually afford to repay such an amount every month. This means that between now and the time when you 1 year old kid is the 2nd year in the university, you will be repaying 78,000.

If you decide to move to another house for one reason or another, you will let out your apartment or house for about Kshs 30,000 if you are lucky. This means that you will be repaying the difference which is about Kshs 48,000 every month from your pocket.

So if you move to another house, say a bigger house closer to work or school for the kids, you will be paying rent because you might not qualify for another mortgage. Assume that now you are 40 and you have 2 or 3 kids and you need to move to a bigger house, you now move to a 3 or 4 bedroom house in South B/C or Kiambu Road or Mbagathi road. You will pay rent of about 50,000 per month. Your total monthly expenditure on housing has now increased to Kshs 98,000 i.e 48,000 (top up from the Mortgage) + 50,000 (Rent). Call it 100,000. That is already half your net pay! You are now left with 100,000 to fuel and service the car, clear your any SACCO loans you might have, pay school fees, save for high school and university and EAT. At this point, your parents are needing more medical attention and you want to do that MBA you have been postponing and start a business etc.

You might be saying, but the house or plot is appreciating in value. True but when you calculate the total repayment after 20 years you will have paid about Kshs 18.5 million assuming that the interest rate remains constant in the next 20 years which is highly unlikely. I doubt that the value of the house will have appreciated to a value anywhere near the 18.5 million. Actually, If you decide to sell the apartment or house after 10 years at Kshs 10 Million, you will make a “loss” because the amount of interest you will have paid plus the capital cost of buying the house and renovating it before selling will be higher than the selling price.

What if I already have the cash, am not taking a loan? Don’t buy the house just yet…. Use your money to make more money, don’t bury it in an immovable asset.

So, what to do?

Buy a parcel of land, like 5 acres and plant trees. Harvest the trees every 10 years and sell them as timber. One acre can hold about 2000 trees. Five acres will hold about 10,000 trees. If half of the trees die and sell the other half at Kshs 5,000 per tree, you will make about 5,000 trees x Kshs 5000 = 25 million. Surely, you can get a very decent house with 25 million.

Buy a plot and build mabati houses and rent them out for Kshs 3000 each per month. A ¼ acre plot can fit about 45 such mabati single rooms with a shared pit latrine and bathroom. 45 units x 3,000 = Kshs 135,000. If you are servicing the 5 million loan we discussed earlier, you will repay the entire loan in just 10 years without ever having to “go back to your pocket”. After the 10 years, the plot has appreciated in value and you have a cash flow of 135,000 every month. What can’t you do with such “extra” cash?

Start a “kabiashara” that will give you about Kshs 500 per day. This will translate to about Kshs 15,000 per month. Add to the 135,000 you now have a “virtual” income of Kshs 150,000.

Buy a plot for speculation and say you will sell it when your kid goes to the university. The sale price might be enough to pay school fees at Oxford or Harvard University for the entire course.
Buy shares and diversify your portfolio.

Enjoy living in a rented house and be a good tenant. Pay your rent in time and live in an area that is convenient for you and your children’s school. Get a big enough house that will fit your family.

Have some cash or “near cash” assets since they say, “opportunity knocks once at every mans’ door”…. Be ready when the knock comes…. And remember, CASH is KING.

Finally, Live life…. Maximize life… YOLO!