Mortgage In Kenya For Real estate

Mortgage in Kenya. Is it the viable option for you?

By definition, a mortgage is a loan from a bank or a financial institution at an interest where the property is the security. The mortgage agreement gives you ownership of the property, and you can move in as soon as the mortgage is approved and payment is made to the property owner.
Yet, until the completion of payments are done, the bank will own the property.

There are 2 types of mortgages in Kenya; Fixed rate and adjustable/floating mortgage. For the fixed rate mortgage, the interest is calculated and fixed until the end of repayment, hence The amount will remain the same,and it will not change till the loan is repaid. However, due its fixed nature this type of mortgage is more expensive. On the other hand, the Adjustable mortgage, also called the floating, is where the interest used keeps on changing based on the market, meaning that any changes in the credit market will be noticed in the repayment rates. This mortgage type is typically attractive due to low initial interest rates, but your payment can double when the interest rate resets. Other than the mortgage interest rate, the other chargers in mortgages which may be included are; negotiation fee, ledge fee charged monthly, stamp duty, valuation fee, legal fees and
commitment fees. 


Buying a home is likely to be the biggest purchase you’ll ever make. A mortgage allows you to purchase a home without having to pay the full price in cash. It spreads the repayment on your home loan over so many years, the amount you’ll pay back every month is more manageable, and affordable. Getting a mortgage loan may seem like a complex process, you may be unsure about your options and what is expected of you during the repayment period. But you need to find the right loan for you, depending on your goals. You should consult with a mortgage
professional to determine if their financial needs are best suited for you. 


Remember, a key rule of thumb is to keep your debt to income ratio as low as possible. Your debt to income ratio is all your monthly debts payments divided by your gross monthly income. To get a qualified mortgage, most financial advisors recommends a total debt to income ratio below 43%. Be careful, your mortgage is a debt secured by your home. If you start missing mortgage payments, you could lose your home to foreclosure.

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