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10-12M mortgage
Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Wazuans, I intend to take this quoted range of mortgage in the next three months(am a civil servant, early thirties) and am torn between a number of options. I request wazuans for their candid opinions on my thoughts. 1. Buy a nice three bedroom apartment in south B/Imara/Nairobi West/langata and rent. Target rent 50K pm. 2. Buy a 2br apartment in Kilimani/Kileleshwa or equivalents then replace some Chinese fittings at about 400K, furnish it at 700K then rent out at 80-100K(is it viable, are there tenants?)(Also don't have the extra 1.2M for repairs immediately) 3. Buy a house in Buru for 8-9M and stay in it with my family. - This option frees my payslip a bit, I can afford small other loans for biashara. Currently renting(30K PM) "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Member Joined: 9/11/2015 Posts: 244 Location: Thika
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tnai9 wrote:Wazuans, I intend to take this quoted range of mortgage in the next three months(am a civil servant, early thirties) and am torn between a number of options. I request wazuans for their candid opinions on my thoughts.
1. Buy a nice three bedroom apartment in south B/Imara/Nairobi West/langata and rent. Target rent 50K pm.
2. Buy a 2br apartment in Kilimani/Kileleshwa or equivalents then replace some Chinese fittings at about 400K, furnish it at 700K then rent out at 80-100K(is it viable, are there tenants?)(Also don't have the extra 1.2M for repairs immediately)
3. Buy a house in Buru for 8-9M and stay in it with my family. - This option frees my payslip a bit, I can afford small other loans for biashara. Currently renting(30K PM) Walk away from a mortgage if you can. Check this link: http://www.milliardaire....e/mortgage-will-enslave/Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Thanks Jones. But I have access to a mortgage at 3% p.a. I believe there is no better rate anywhere in the republic. Reason I would like to take it. Plus I can get upto 100% financing, just need proper documents "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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tnai9 wrote:Thanks Jones. But I have access to a mortgage at 3% p.a. I believe there is no better rate anywhere in the republic. Reason I would like to take it. Plus I can get upto 100% financing, just need proper documents Are you getting mortgage bacause you are in GoK? If you ever moved to private sector, will the mortgage be affected? Compare what you'll spend on mortgage per month and possible rent that you can get from the house. The opposite of courage is not cowardice, it's conformity.
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Rank: Member Joined: 9/11/2015 Posts: 244 Location: Thika
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tnai9 wrote:Thanks Jones. But I have access to a mortgage at 3% p.a. I believe there is no better rate anywhere in the republic. Reason I would like to take it. Plus I can get upto 100% financing, just need proper documents If its possible to get the cash 12 million, buy an eighth in a satellite town like Ruiru...build bedsitters and you will be smiling all the way to the bank. Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Jon Jones wrote:
If its possible to get the cash 12 million, buy an eighth in a satellite town like Ruiru...build bedsitters and you will be smiling all the way to the bank.
Other conditions I have 1. Only one mortgage allowed at a time. 2. Can only buy a residential house, fully built(no off plans), no commercials "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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jerry wrote:
Are you getting mortgage bacause you are in GoK? If you ever moved to private sector, will the mortgage be affected? Compare what you'll spend on mortgage per month and possible rent that you can get from the house.
I have considered this, and I'll only move if the new employer gives me an increment that will cover the increased interest. I also have an allowance of up to 1yr within which to sell the house and pay off. I also realize i will be forced to be very choosy with employers "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Member Joined: 7/3/2014 Posts: 245
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tnai9 wrote:jerry wrote:
Are you getting mortgage bacause you are in GoK? If you ever moved to private sector, will the mortgage be affected? Compare what you'll spend on mortgage per month and possible rent that you can get from the house.
I have considered this, and I'll only move if the new employer gives me an increment that will cover the increased interest. I also have an allowance of up to 1yr within which to sell the house and pay off. I also realize i will be forced to be very choosy with employers This will be a yoke. You better off renting then saving and investing. In the world of securities, courage and patience become the supreme virtues after adequate knowledge and a tested judgment are at hand.
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Rank: Elder Joined: 2/22/2009 Posts: 2,449 Location: Africa
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Jon Jones wrote:[quote=tnai9]Wazuans, I intend to take this quoted range of mortgage in the next three months(am a civil servant, early thirties) and am torn between a number of options. I request wazuans for their candid opinions on my thoughts.
1. Buy a nice three bedroom apartment in south B/Imara/Nairobi West/langata and rent. Target rent 50K pm.
2. Buy a 2br apartment in Kilimani/Kileleshwa or equivalents then replace some Chinese fittings at about 400K, furnish it at 700K then rent out at 80-100K(is it viable, are there tenants?)(Also don't have the extra 1.2M for repairs immediately)
3. Buy a house in Buru for 8-9M and stay in it with my family. - This option frees my payslip a bit, I can afford small other loans for biashara. Currently renting(30K PM) Walk away from a mortgage if you can. Check this link: http://www.milliardaire..../mortgage-will-enslave/[/quote] If you take a 10million shilling mortgage for 18 years you'll be repaying around 60k per month so option 1 would not make economic sense. A 7-8 million shilling rental property would make more sense.Also look into the possibility of making accelerated repayments so that you're not tied to the full 18 years
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Shak wrote:
If you take a 10million shilling mortgage for 18 years you'll be repaying around 60k per month so option 1 would not make economic sense. A 7-8 million shilling rental property would make more sense.Also look into the possibility of making accelerated repayments so that you're not tied to the full 18 years
I was looking at it this way, that if am paying for example 70K pm for fifteen years, and renting at 50k, effectively am just topping up the rental income with 20k,so my net salo is just less 20k(off course have to provide for defaults etc). This allows me to take and service say another sacco loan. I expect, over the fifteen years, rent to increase and at some point it may pay the mortgage. The Sacco loans will be for starting projects/biasharas to assist in accelerating the mortgage. "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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This is where am coming from - http://www.aren.co.ke/calculators/loancalc.htm
LOAN REPAYMENT CALCULATOR Amount Borrowed 10,000,000 Annual Interest Rate (%) 3 Number of Monthly Payments 180 Monthly Payments 69,058 Total Payment 12,430,440 Total Interest 2,430,440 "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: User Joined: 1/20/2014 Posts: 3,528
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That loan is dirt cheap, go for it. I would go option 3 way and fast track repayment. Remember the asset 'property/house' will be appreciating in value over the long run!!! Formal education will make you a living. Self-education will make you a fortune - Jim Rohn.
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Rank: Member Joined: 3/3/2016 Posts: 132
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Yeah, 3% is too a good a deal to pass up I think. Whatever option you decide, I'd take the mortgage.
Also, I think it's important to remember that monthly payments are stagnant, rents are not. Think about what rents were 5-10 years ago in Nairobi. They probably won't be 30k or 50k forever.
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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Its a no brainer, take the mortgage quick quick. The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment. "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Veteran Joined: 12/4/2009 Posts: 1,982 Location: matano manne
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@T9, I'd go for the mortgage without thinking twice. Please share the fine details of the procedure and process with at rahatupu at ymail dot com.
One more thing, the banks have a way of working round the restrictions on commercial properties. However, you'd have to already have the land on which to put up a commercial building (you could get this from your sacco), so the 10-12m could be used for construction of say ground floor.
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Obi 1 Kanobi wrote:Its a no brainer, take the mortgage quick quick.
The test is simple, its a good deal as long as the interest component of the monthly payments are lower than the rental incomes. Principal component is an investment. That is very good to realize, hadnt looked at it this way..I should have taken more Econ units  . Its not so obvious to me. I look at the installment vs Income..Thanks a lot Obi..  "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: Member Joined: 6/21/2010 Posts: 345 Location: easto
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Rahatupu wrote:@T9, I'd go for the mortgage without thinking twice. Please share the fine details of the procedure and process with at rahatupu at ymail dot com.
One more thing, the banks have a way of working round the restrictions on commercial properties. However, you'd have to already have the land on which to put up a commercial building (you could get this from your sacco), so the 10-12m could be used for construction of say ground floor. Thanks Rahatupu. Nitarudisha mkono.. "The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." ― Charles Bukowski
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Rank: New-farer Joined: 2/14/2015 Posts: 97 Location: Kenya
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tnai9 wrote:Jon Jones wrote:
If its possible to get the cash 12 million, buy an eighth in a satellite town like Ruiru...build bedsitters and you will be smiling all the way to the bank.
Other conditions I have 1. Only one mortgage allowed at a time. 2. Can only buy a residential house, fully built(no off plans), no commercials With those conditions, consider this option: Buy a fully built small residential house with a large compound e.g., 1/2 acre or 1/4 acre. And then you can consider building another house(s) in the site to generate income - in the longterm. But, of course take the money - maximum allowed.
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Rank: Elder Joined: 11/5/2010 Posts: 2,459
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Boss at 3% you don't even need a calculator. You are getting free money (inflation @7%).
Another sweetener, mortgage relief of up to 12,500 deductible from taxable income.
If your employer can agree to effect the above at source, your monthly interest charge drops by another 4k.
However, you need to find out who caters for the fringe benefit tax I.e. the difference between what you are paying in interest and what kra thugs usually call the fringe benefit tax rate. It's usually announced quarterly and it's the average of 91-day t bill rate for the preceding quarter.
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Rank: Member Joined: 3/26/2012 Posts: 280
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I wouldnt accelerate payments if the job is secure n salo okay. You will miss out on the concessional interest. Do an excel work out. Having said that; go for not so mordern house but on a big compound. Eg Otiende; kimathi east. In future you can demolish the house and build flats. DOH
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