Am picking this mortgage, why?

    March 29, 2015   No comments

 What exactly makes pick one mortgage loan package and leave the other? What attracts you to your favourite package? The fact is you'll in all circumstances repay the loan amount plus interest to the lender regardless of the amount in question. Am sorry my learned fellows .In all posts in this blog my target is the common /ordinary person who needs to live, borrow
and prosper just like others though they lack enough knowledge about the lending, credit and finance sectors.My language therefore is the simplest and friendly only to ensure that one get at least something for survival tomorrow.
 Back to the topic.When I talk about mortgage, it's all about houses and owning a house.So, if you'll be looking to own a house or building or buy a house for business or residential purpose ,what are you going to consider leaving out majority of the terms used in real estate?
 Whoever the lender might be , I have a collection of some of the preliminary characteristics of a favourable mortgage plan for a startup:


   1. Extent of financing.

How much is the lender ready to give in relation to the cost of the house or building? Majority of lenders will finance upto a given percentage for example 80% and cover the rest yourself.As for me I think 100% financing is better. Let there only be the pain of repaying the loan when it's due.The thing is ,if you want a house let you see a house but not iron sheets, timber , sand and no bricks! This drives me to my second characteristic; real estate company involvement.


   2.Real Estate company involvement.

Real estate companies are the experts in matters concerning building houses with the right experience. The thing is these people will show you a house.what am I saying? Good mortgage givers enter into partnerships with real estate companies to give mortgage loans to their clients. Here , even the convincing power is high because the customer can view the real house on site. The advantage again is that you can right away start using the house for your residential or business purposes. Let there only be the pain of waiting for full ownership rights when the loan is fully settled. What will I do with a plot I would like to develop? Simple, let the lender develop it for you through a real estate company.


  3.Minimum Deposit.

The minimum deposit comes in when the loan can't finance the cost of the building 100%. The percentage left (in reference to characteristic number 1, the minimum deposit will be 20%) is termed as the minimum deposit required for a borrower to qualify for that mortgage. A good mortgage should have a small or no minimum deposit altogether.


   4 . Insurance

Okay ,this is complex but it good to know. What will happen to you if the house you were loaned get consumed by fire or brought down by a hurricane? All the property used as collateral will be gone! Therefore, to avoid this , consider a mortgage package that has an insurance plan incorporated in it.The monthly premiums will save your collateral property.


    5.Duration of maturity.

When will the loan be fully repaid? Currently in Kenya, majority of lenders give upto 7 months ,that's a duration of six years. This is the best duration for a good mortgage loan.Why? Because the amount of monthly instalments will be very low .Are you not happy paying just small amounts of money for a big mansion?

The above characteristics of a favourable mortgage loan are the main ones according to 'Loans Kenya'. There are other factors too which apply to all loans .These are ; loan interest rate, secured or unsecured and valuation fees and stamp duty.

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Mwabaya Katana

Posted By Mwabaya Katana

Mwabaya Katana is a Personal Finance online writer.He is the founder of 'Loans Kenya' Blog.

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