You’ve heard about down payments outside there but have you ever wondered what works and what doesn’t?
Buying a home is a huge lifetime decision that can affect you for the rest of your life, therefore it’s always good not to take chances for granted during this process.
Saving for a down payment (DP) is a major headache with Kenyans considering that mortgage intake is still very low in the country with more than 50 percent of buyers offering less than 20 percent of the down payment.
So What is a Down Payment?
A down payment is the amount of money you spend upfront to purchase a home and is typically combined with a home loan to fulfill the total purchase price of a home. Together with other factors like your debt, credit scores, lending history and annual income, your DP will determine the amount of loan you will be given by financial institutions.
Why 20% Down Payment?
20% is actually recommended because it gives you a number of benefits like flexible monthly repayment options with lower interest, you’ll avoid paying mortgage insurance and it will also give you more equity.
Additionally having a large down payment gives you a competitive edge over the rest of the interested buyers.
Save Save Save
The biggest hurdle to buying a home is saving for a down payment especially for first time buyers, we’ve seen families taking loans, having chama’s etc here in Nairobi and other towns across Kenya to purchase a home.
Therefore to reduce the hustle, start early, do it slow and you will save more than you can imagine for that dream home because it will be challenging for you to get a loan with a zero-down payment.
That’s it for today folks, still have more questions? Call us today.