Types Of Mortgages in Kenya For Homebuyers

Types Of Mortgages in Kenya For Homebuyers

House Mortgage in Kenya

Applying for a loan can be complicated if you need a proper direction on the type of home you want. If you intend to buy a home with a mortgage, you should first search for the right one. There are several types of mortgages you can go for, but you need to know what’s in the package. The different types of mortgages have additional terms and rates, so your decision should be informed.
In this article, we shall discuss the types of mortgages that homebuyers can go for.

Fixed-Rate Mortgage

This is a type of mortgage whose interest is fixed for the duration of the loan. Fixed mortgages have a repayment term of between 15 and 30 years. Once you are given the loan, its interest won’t fluctuate until you finish paying it. In short, you will be paying the same amount until you clear the loan.
Nevertheless, several factors determine this type of mortgage, including your financial status, insurance, and current interest rates. There are several pros of a fixed-rate mortgage, and some of them are mentioned.

1. Easy to budget
2. Interest rates remain the same
3. Flexible terms
4. Best when the rates are low

The main downside of this type of mortgage is that you will make a higher monthly payment because of its financial stability. Also, the size of this mortgage is low; hence it may limit the amount of money you qualify for.

Adjustable Mortgage

This is a type of loan whose interest rate keeps on changing periodically. This is to say that the initial interest that a lender gives is lower on an adjustable mortgage compared to the fixed loan we have discussed above.
Usually, when giving the loan, lenders will set an initial period of 3-7 years, during which the interest will remain the same. Nevertheless, when that period lapses, your mortgage adjusts as the rates keep changing. This means that the rate will start increasing or decreasing after the initial period where the rate was constant. These adjustments may occur once in 12 months.

This type of mortgage is affected by index or margin. The index is the standard interest that reflects the market’s current condition, while a margin is a number that can adjust on an adjustable mortgage. The best side of a margin is that it’s negotiable.

Here are the benefits of an Adjustable Mortgage
1. Lower interest rates
2. Low monthly payments
3. They are negotiable

As much as the adjustable loan may sound the best, it is risky because the rate may rise anytime, causing an increase in your monthly payments. Additionally, your financing options are limited because you can’t sell the property or request refinancing before the adjustable period starts.
We have discussed the types of mortgage loans in Kenya, and you now know what each loan offers. Nevertheless, it is wise to do your research and understand the risks involved in each loan before borrowing.

Here is the list of mortgage companies in Kenya where you can get information and assistance. When you buy a prime plot with Denver Real Estate in Ruiru, Kamulu, Joska, Or Malaa towns you can get affordable mortgage in Kenya for your house.