Beginners Guide 

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 people afford to realise their dream  without needing a mountain of cash upfront.

But wait, there’s a bit of mortgage vocabulary to learn. We’re talking about stuff like “principal,” “interest rate,” “loan term,” and “down payment.” Don’t worry; let us explain.

1. Principal – The Foundation of Your Mortgage.

This is simply the amount of money you borrow from the bank..

1. Interest Rate – The Cost of Borrowing

This is the amount charged to the principal and is often expressed as a percentage.

1. 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 million of shillings all at once, your monthly payment breaks it down into more affordable payment. 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.

If you have any specific queries that you’d like us to address in this mortgage guide, do not hesitate to reach out to us rose@rosenconsultants.com at +33 7 51 32 80 48