Hey there, future homeowner!
So, you're diving into the world of mortgage, huh? Well, you've come to the right place. Buckle up because we're taking you on a journey to understand mortgage in a way that won't put you to sleep.
Mortgages 101: The Ultimate Guide.
We get it, the word "mortgage" might sound all serious but hey! Worry not! We are here to break it all down for you.
Let's kick things off with the basics. What is a mortgage? A mortgage is a loan that you get to purchase a home and the unit you’re purchasing is the security used to get the money. It's how most folks afford to snag their dream digs without needing a mountain of cash upfront.
But wait, there's a bit of mortgage lingo to conquer. We're talking about stuff like "principal," "interest rate," "loan term," and "down payment." Don't worry; let’s get into it.
a. Principal - The Foundation of Your Mortgage.
This is simply the amount of money you borrow.
b. Interest Rate - The Cost of Borrowing
This is the amount charged to the principal and is often expressed as a percentage.
c. Loan Term - The Duration of Your Mortgage
The mortgage term is just a way of saying how long you'll be making those monthly payments– 15, 20, or 25 years.
Monthly Payment - Your Regular Homeowner Contribution
Instead of forking over a gazillion shillings all at once, your monthly payment breaks it down into more wallet-friendly monthly chunks. This monthly payment is inclusive of the principal and the interest.
But wait, you may be asking yourself, “So if I take up a mortgage, I will have to make all these payments separately?” Well, let us put it into context for you. Take our Affordable Housing Mortgage product for instance. The loan amount you can get is up to Kshs. 8 million and this is your principal. The interest rate is fixed at 9% p.a and the loan term is up to 25 years. If you were to take the full mortgage amount at the fixed rate of 9% p.a for 25 years, you would be making monthly payments of approximately Kshs. 67,136 for 25 years. This is not to say that you are limited to paying just that amount every month. In fact, the more you pay per month, the quicker you pay off the loan and the lower your interest rate will be. We do not therefore penalize you for accelerating your mortgage payments. T&Cs apply of course.
And there you have it folks. That is all we have for you in this episode, but we will be back with more mortgage gems that you do not want to miss. If you have any specific queries that you’d like us to address in this mortgage series, do not hesitate to reach out to us on KCBKenyamortgages@kcbgroup.com. Until next time…
Over and out,
Witty Banker (Mwalimu wa Mortgage.)
