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Is Taking a Mortgage the WORST Decision Ever??
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Aguytrying
#601 Posted : Tuesday, November 10, 2015 10:50:47 AM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
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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Obi 1 Kanobi
#602 Posted : Tuesday, November 10, 2015 2:16:57 PM
Rank: Elder

Joined: 7/23/2008
Posts: 3,017
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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Swenani
#603 Posted : Tuesday, November 10, 2015 3:28:16 PM
Rank: User

Joined: 8/15/2013
Posts: 13,237
Location: Vacuum
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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obiero
#604 Posted : Tuesday, November 10, 2015 5:53:43 PM
Rank: Elder

Joined: 6/23/2009
Posts: 14,225
Location: nairobi
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!
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tmakto
#605 Posted : Tuesday, November 10, 2015 7:25:44 PM
Rank: New-farer

Joined: 10/28/2015
Posts: 47
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 smile

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Mike Ock
#606 Posted : Wednesday, November 11, 2015 8:42:37 AM
Rank: Member

Joined: 1/22/2015
Posts: 682
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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TPK
#607 Posted : Wednesday, November 11, 2015 2:52:04 PM
Rank: Member

Joined: 6/17/2011
Posts: 129
Location: Nairobi
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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Impunity
#608 Posted : Wednesday, November 11, 2015 3:24:34 PM
Rank: Elder

Joined: 3/2/2009
Posts: 26,331
Location: Masada
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?

d'oh! d'oh!
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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nakujua
#609 Posted : Wednesday, November 11, 2015 3:26:49 PM
Rank: Elder

Joined: 12/17/2009
Posts: 3,583
Location: Kenya
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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dunkang
#610 Posted : Wednesday, November 11, 2015 3:29:20 PM
Rank: Elder

Joined: 6/2/2011
Posts: 4,824
Location: -1.2107, 36.8831
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.

Shame on you Shame on you Shame on you Shame on you

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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