One piece of advice my mother gave me was to “always buy the most expensive house that you can afford”. Her reasoning? Inflation will always keep pushing your income up while home loan repayments are pegged to the original purchase amount.
Although the advice worked for my family, it did not seem to be a great idea back in 1987 when we moved from a small apartment to a large house that we could hardly afford to furnish or heat for almost two years in cold Scotland. I am often surprised at how quickly buyers make decisions only to regret later. Relocation is a milestone since the family may live in that same house for generations.
Factors to consider Mortgage payments could need to be made for up to 20 years. Do your homework well to make sure that the chosen house fits the bill before taking the plunge. Some factors such as room sizes, distance from work, proximity to shops and other amenities are easy to consider.
Others are not so straightforward and you may need a checklist: security issues, traffic congestion, travel times, parking spaces, water and power supply, noisy neighbours, play areas, communal places, sustainability, estate maintenance, service charges and planned future developments.
You may also need to think ahead since a location that may not be perfect this year may well suit the growing family well as time passes. One or two visits will not provide enough information, hence the need to take time to visit the property on several occasions and at different times of the day.
Keep your eyes and ears open for anything that you may find difficult to live with. Above all, talk to people who may become your neighbours. Are they happy with the location? What are the best and worst aspects of the estate and the local area in general? All this will help you make an informed decision.
Everybody wants value for their money. In Kenya, there are basically two main ways of paying for your new home. First, a developer who is short of working capital will want to establish a track record for sales so you might negotiate a lower buying price as an early purchaser unlike those buyers who wait on the sidelines until they can “really” see whether the development will succeed or not.
The trailblazers in our Greenpark development took a calculated risk by paying deposits and have now seen the value of their home multiply fourfold. On the other hand, if you wait until everything is completed, you can be sure of what you are buying in a classic risk-and-reward situation.
Consider all your options if you are taking a loan to buy the property. Loan structures Loan structures can vary considerably and your aim should be to find one that suits your particular circumstances. Some of us understand money very well while others don’t.
Some banks put profit ahead of their responsibilities to customer service. If you are unsure about the interest rate, whether it is fixed or variable, securities, insurance or any other aspects of your home loan, find an independent person that you trust to advise you and peruse through the offer documents.
You intend to give the lender business so take time to shop around and find the provider that suits your requirements. Try and keep the terms of the loan agreement as flexible as possible. Beware of small print such as early repayment penalties, which are simply money-making tricks employed by lenders to catch unsuspecting borrowers.
Don’t put your signature in anything unless you are very sure of what you are signing.
— The writer is the Managing Director of Superior Homes Kenya Limited.