05/07/2020
A Case Study on a mortgage for a 10M house at KCB Bank whose interest is 13.5 P.a.
The bank requires you to raise a 10% deposit which is 1,000,000 then BANK CHARGES are as follows
Application fee 225,000
Monthly service fee 84,000
THIRD PARTY CHARGES
Stamp duty. 400,000
Legal fees. 133,750 (minimum)
Valuation fees. 100,000
Excise duty. 30,000
Annual life insur. 212,152 (you wonder what this is for)
Fire Insurance 157,500 ( as if fire will burn your house)
The Bank therefore funds the remaining 90% which is 9,000,000 payable in 20yrs (sounds like a good deal right? Hold your horses)
The interest payable to KCB is 17,079,292
Your monthly installment is 108,663.
In other words,by the time you repay the loan you will have spent 27,422,595 for the 10M house. Are we together? And just remember that a house being sold for ksh 10 million probably cost ksh 6m or less to build.
Focus on the 71,163 you pay monthly to the bank as interest only.
Pray that fortunes never change in between forcing you to default on the monthly installments because the bank may become a nightmare..........................................
To those who keep saying your house is an asset, if it's mortgage, I have nothing to add. For the 20 years you keep paying for that House, you also keep praying that the title is legitimate. A government minister or a parastatal chief can one day wake up drunk and say that the House is built on a grabbed government land. The next day very early in the morning, the bulldozers arrive!
There are other ways to own a House in this Country. Just keep off mortgages. It is a rip off..........
