Perhaps a mortgage is what is right for you

‘Mortgage’ is such an unfriendly word, don’t you think? Whenever I write it down, let alone read it out aloud, I feel such hostility towards it. As if it is a members-only club I will never gain access to. Believing I am excluded makes me want to punch somebody in the face.

Mortgages conjure in my mind an image of financial wellness I doubt I can attain soon. I imagine a corporate in a midnight black fitting power Zara suit. I imagine a car whose side mirrors no one wants to steal. And children in schools that aren’t weathered by the storms of Sossion’s tantrums.

PIPE DREAM

I imagine a neighbourhood where folk obey traffic lights and never ‘cut’ lanes. Where you never see anyone walking to mama mboga’s kiosk or to the stage to catch some ramshackle sacco-affiliated matatu. I also imagine a fuzzy Japanese spitz named Snuggles; because that is all he does in his little life as a housedog, snuggle up. In a single word, I imagine never being able to afford a mortgage. Maybe the dog I can afford to keep. Maybe. But I would name him Kiptoo.

A mortgage is a home loan taken with a financial institution to purchase or construct a house. You pay the loan back monthly, over a couple of years. The financial institution extending this home loan could be a bank, Sacco or a mortgage finance provider.

UNATTAINABLE

Mortgages feel unattainable to me because they seem like they are (a) for the employed (b) for the employed that fall above a certain minimum income level (c) for property in a particular part of the city (d) a form of daylight robbery (e) a ball and chain of eternal debt.

And yet, the more I read about mortgages; the more I engage with urbanites in my age bracket servicing them through banks, the more I begin to see how short-sighted and ill-informed my assumptions of exclusion are. A wise man once said, “What we don’t understand, we fear. What we fear, we judge as evil and attack.”

As far as mortgages go, I admit I have been a fool. I have been blind to its opportunities and my risk mindset fixed to what I am familiar with. As with every financial product and investment plan there exists, there are mortgages cut to fit your financial cloth. There is something for everyone. That’s for sure.

I am married to a ‘village chief’ from Nyeri, his moniker here is GB. We have a daughter that turns four in November. For a long time, I strongly believed the only way my young (growing) family would own a home in Nairobi is if we partly paid for it in cash, then topped up the difference with a regular Sacco and bank loan. I told myself – and convinced GB – that we would rent until our finances were stable enough to action this pie-in-the-sky plan, in our mid 40s.

I turn 35 next Saturday, Inshallah. I realise now that my plan is flimsy. There is the question of keeping our cash liquidity levels at a healthy balance. I am also not certain how much money we can raise as a young couple to put the down payment on a house in a neighbourhood I like. We could also build our own house in the outskirts of the city, in one of those mushrooming suburbs. Question is, would we go live out there? Maybe we can build then rent it out then live elsewhere. Maybe?

I am keen to demystify mortgages so I can stop fearing and attacking them. I have matured financially to the point where I want to tame them into a loyal house pet. A life partner. I am ready. I think you are, too.

ABC OF MORTGAGES

For the next couple of weeks I will share with you the ABCs of mortgages in Kenya. Think of it as a miniseries. I will speak to Kenyans servicing mortgages and to financial institutions that extend this service to such Kenyans. I will tell you how mortgages are structured, what the monthly repayments look like and whether stamp duty has an actual kingfisher stamp affixed to it.

When I complete the miniseries, I hope I won’t feel like punching somebody in the face whenever they mention ‘mortgage’.

Bett Kinyatti is a certified accountant with ACCA and a former financial auditor. She runs a personal finance column with Daily Nation online