{"id":5803,"date":"2016-12-25T13:18:45","date_gmt":"2016-12-25T13:18:45","guid":{"rendered":"https:\/\/ub.co.ke\/backup_site\/?p=5803"},"modified":"2016-12-25T14:55:26","modified_gmt":"2016-12-25T14:55:26","slug":"idea-taking-mortgage-high-interest-regime-terrible-decision","status":"publish","type":"post","link":"https:\/\/ub.co.ke\/backup_site\/idea-taking-mortgage-high-interest-regime-terrible-decision\/","title":{"rendered":"Why the Idea of Taking a Mortgage in a High Interest Regime is a Terrible Decision."},"content":{"rendered":"

This Four Part Knowledge Series on Mortgages is\u00a0based on a recent Twitter Mortgage Thread. You can comment on it and interact with me in Real Time Here.<\/a><\/p>\n

Part A. Unsustainability of a Mortgage:<\/span><\/strong><\/p>\n

a) Unreasonable Terms: Under our interest rates regime and volatile market, the question, “Should i take a mortgage?”, “Is up there with, “Is there Life After Death?”.\u00a0The ideal strategic planning timescale is 3 to 5 Years. How people convince a mere mortal to take a 25 to 30 Year Mortgage is a Mystery!<\/p>\n

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Typical Planning Timescale<\/p><\/div>\n

The planning period is important because it is an indicator of the Exit Plan. For example, The Mombasa-Malaba Standard Gauge Railway loan from EXIM bank has a 2% interest per annum with a grace period 7 to 10 years. Commercial loan has similar periods. It is also interesting to note that when you compare Mortgage and Life Spans, you find that the life expectancy at birth in Kenya is 63.52 while that of a cheetah in the wild is 10 to 12 years. This implies that\u00a0Three generations of Cheetahs would have been born before you finish paying that mortgage. And technically half your “expected life.”<\/p>\n

b) Hidden Costs:\u00a0“Hidden” Mortgage Costs Can exceed 10% over and above the Mortgage Rate! When signing up, you may not be aware of Additional Charges. Beware, Hidden Mortgage Costs Can exceed 10% and Most of Our Banks don’t make full disclosures!<\/p>\n

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Examples\u00a0of Hidden Mortgage Costs are:<\/p>\n