The mortgage market is incredibly competitive and hard to understand what exactly is best for you. Especially in Kenya, different banks have different requirements that can still be difficult to substantiate. So, how can we make sure that we understand exactly what is on offer and get the best value from our lenders?
Most lenders offer you advice by recommending the most suitable mortgage for you. Usually, they do this by assessing the mortgage you want, quantifying it against the level of mortgage repayments you can afford, by taking into account your income as well as any debt you may have.
Although lenders are obligated to give you this advice, you can still choose to reject the advice and find your own mortgage deal based on your own research. This would also help you to negotiate better terms when you do find one that is suitable for you.
What to Look for When You Are Trying To Find the Best Mortgage
With the interest rate cap effective in most financial institutions in Kenya, it does make taking a mortgage look more lucrative. However, it does make the accessibility to the mortgage a lot more difficult. Borrowers are being scrutinized heavily by lenders.
However, other than the interest rate, it would be paramount when negotiating to look out for other factors, which also contribute to the whole amount you pay back over time. This include:
- APRC (Annual Percentage Rate of Change): This takes the mortgage fees into account as well as the interest rate and expresses it as a percentage. This will enable you to track your repayments over the years so that you can check up on your investment
- Deposit size:. The higher the deposit, the lower the interest rate you are likely to get. This will enable you to choose an amount that you can manage conveniently and without any hustle.
- The length of fixed or variable rate deal: Do you want to be locked in for a long period or have more flexibility? There will be charges if you switch out of a deal before it ends
- Flexibility: This is the ability to pay back your mortgage sooner and not getting charged. It is also negotiating with your bank to allow you to take breaks from your normal payments and not getting penalized.
Can I Do This Alone?
Sometimes, doing all that research and negotiating can be daunting, so it would also help to engage an independent financial advisor to help you get the right information to make an informed decision.
Some other reasons to have a financial advisor are:
- They will help you take all the costs and features of the mortgage into account, beyond the interest rate
- They will check your finances to make sure you can afford a mortgage
- They should only recommend a mortgage that is suitable for you and will tell you which ones you are likely to get
- They often complete the paperwork for you, so your application should be dealt with faster
- They may have leads to exclusive deals with other lenders, not necessarily for a bank
What are the risks of not getting professional advice? If you don’t take advice you could end up:
- With the wrong mortgage for your situation, which would be a costly mistake in the long run
- Being rejected by your chosen lender because you didn’t understand the restrictions clearly or what circumstances the mortgage was designed for
Always bear in mind that you are the client, at the end of the day, the lender needs your business. Do not be afraid to negotiate for the best deal.
What has been your experience when it comes to getting a mortgage? Furthermore, would you ever get a financial advisor to assist you? Please comment below and let us know what you think?
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