Hi Wazuans,

I currently own a house on which l am told l can get financing from HF, with the house as collateral. The thing is a couple of cases l know like this from back in the day, ended up with the owners losing the houses to banks - which were sold for a song by connected bank managers. I also have access to an arrangement my employer has with HF for 6% interest on reducing balance. Any wazuans out there with this HF arrangement? What's your experience? I have spoken to HF and even got all documentation - looks too good to be true. Would like to use the funds to develop some property. But concerned due to historical reasons

Thanks GG.The fear of taking loans was background info, due to past experiences. My question revolves around your points number 1 and 3.

@ GG
Barrywhite is very clear on why he needs the loan (develop some property). In your response, you talk of conspicuous consumption and a head not screwed right. I don't think it was warranted. Let us help others without use of such words unless we have all lost values

I doubt the returns on the property will be able to service the loan. Again l cant get the moratorium. But l have a few fall-backs that could become handy should l leave employment and have the interest rate go to 14.5% - by clearing a considerable bit of the loan. These back ups are off-shore stocks, NSE, sacco, a life insurance and investment cover and a couple of undeveloped plots. And may be at worst pension. What l am not sure about is whether to go for the HF deal or liquidate some of this and develop the property loan-free; and start all the above from ground zero. Is there someone out there who can look at all these and advice - even if at a fee the opportunity costs and the most effective economic way forward.

I take no offence to any of the above advice. Thanks so far for all.

@Barrywhite if you doubt the returns will be able to service a loan of 6% why on earth are you developing that property? The cheapest loan you can get is 12% from a sacco so 6% is a super bargain. I think you are risk-averse. What you need to look at is just how much of your present income will go to repay the mortgage if it's more that 35% just forget for now until you improve your cash flow. IMHO it would be unwise to liquidate your holdings to develop a property which can't repay 6% mortgage it will just make you broke.

I thought HF has some guys who spew all this advice when they assess your suitability for a loan.