19th Oct 2019
The first bank I approached for a mortgage dragged its feet. The location of the house made them jittery about investing in me.
The second bank also dragged its feet. But I didn’t lose hope. The third bank took me in with open arms.
The mortgage salesman was also an enthusiastic young chap who thoroughly schooled me on the process and what to expect. He psychologically prepared me, which was crucial.
I remember I reached out to him in late August and by October, we were well into the application process.
Aside from the eight per cent deposit for the house, I also had to settle other charges to the bank, government and other third parties.
The charges included stamp duty of four per cent, legal fees, valuation fees, negotiation fees, insurance and land rates. I also had to pay my own lawyers.
These initial charges came to Sh900,000. I settled them from my savings. The bank approved a mortgage of Sh5.4 million for 25 years. I would be repaying Sh68,300 per month.
We all cried when we got the house keys in January 2017. Mum moved in at the end of the month.
When getting a mortgage, consider also the financier’s customer relationship and the efficiency of their tech systems. My bank didn’t have reliable systems.
There were months my mortgage account wasn’t automatically debited, so I accrued penalties for non-payment.
The frustrations from these inefficiencies drove me to search for another bank with lower rates to buy off the mortgage.
When another bank buys your mortgage, you have to settle the initial charges all over again. Thankfully, the bank had a limited offer where they waived most of these charges.
They bought off 75 per cent of the mortgage. I looked for Sh440,000 to settle the difference. This early settlement has lowered my monthly repayments to Sh50,100.
I’ve been steadily growing an investment portfolio in the stock market. My plan is to liquidate this portfolio sometime in the future and clear the mortgage.
I’m not giving myself pressure, though. I don’t tell myself that I have another 23 years of debt, I just think of making next month’s repayment. That’s it. One month at a time.”