Buying a home is the most expensive transaction that most Kenyans will ever make. The median home value in the country was Ksh10.9 million in 2018, according to the Kenya Bankers Association.
Since most people do not have that kind of money in cash, a mortgage in which you borrow cash from a bank and spend years paying it back is an integral part of the home-buying operation.
How to get the cheapest mortgage rate in Kenya:
1. Save up for a down payment
Raising a high down payment is a sure way of getting a great mortgage deal. The higher the deposit you put down, the lower the loan you need. And of course the lower the amount you want to borrow, the more interest rate options you get.
The key criteria in Kenya is always based on whether you are better off reducing your monthly mortgage repayments compared to earning a return in some other form of investment.
2. Shop among multiple lenders
This may sound like a complete no-brainer but you will be surprised that many people do not hunt for the best mortgage deals.
Make the necessary research to ensure that what you are getting from a lender is the best deal in the market. Look beyond your bank or sacco. Talk to multiple lenders and explore all their options.
Just like you do when purchasing a car, test drive your loan before proceeding with your purchase.
There are quite a good number of mortgage providers in Kenya willing to give you attractive interest rates, including Equity Bank, Housing Finance Limited and Savings & Loan a subsidiary of Kenya Commercial Bank.
3. Ask the right questions
There are two things you need to know about interest rates generally, the current rate and the future expectations of where interest rates will go.
Current interest rates in Kenya are set depending on the amount you want to borrow and the duration (term) you want to borrow for. Be sure to ask as many questions as possible regarding the rates that you are signing up for to avoid future shock of interest rates variations.
4. Seek expert advice
From the above, you should now have the bits that will help you decide what type of house you will buy based on its monthly or annual cost. You just need to consult a housing finance provider on this or just check out for Kenyan real estate websites offering mortgage calculators.
5. Don’t bite off more than you can chew
Due to the fast rising prices of houses in Kenya, under rare circumstances will repayments be less than the monthly rent of a home. It is therefore impossible to expect to repay your loan using your rental income unless of course you plan to top up from your other sources of income.
VAAL Real Estate was Founded with the aim of reducing the hassle of finding and buying homes. VAAL Real Estate has been successful in developing a brand whose main aim is to change the market by understanding and satisfying the needs of potential and future home owners.