Should You Take a Mortgage to Buy a House in Kenya? Pros & Cons
Buying your own home is a dream for many Kenyans. But for most people, raising millions of shillings to buy a house in cash is not possible. This is where a mortgage can help.
However, taking a mortgage is a major financial commitment. A house that costs KSh 6 million can end up costing much more over a long repayment period because of interest and other charges.
A recent discussion among Kenyans has once again raised the question: Is taking a mortgage really worth it?
A KSh 6 million house can cost much more
One homeowner shared his experience after taking a mortgage in 2019 to buy a house along Mombasa Road.
According to the discussion, he was disappointed by how slowly the loan balance was reducing and the amount of time he still has to make repayments.
A mortgage calculator was then used to show how expensive a long-term loan can become.
For example, depending on the interest rate and repayment period, a KSh 6 million mortgage can require total payments running into many millions of shillings above the original amount borrowed.
This is why borrowers should not look only at the monthly instalment. The most important figure to check is the total amount you will have paid by the time the mortgage is cleared.
Why mortgages can become expensive
The main reason is interest.
When you take a mortgage for 15, 20 or 25 years, you are not simply paying back the amount you borrowed. You are also paying interest over many years.
At the beginning of the loan, a large part of your monthly payment can go towards interest, while a smaller portion reduces the principal.
This can make borrowers feel like they have been paying for years without seeing a major reduction in the outstanding balance.
Other costs may also apply, depending on the lender and mortgage product. These can include valuation, legal, insurance and other fees.
Should you avoid a mortgage completely?
Not necessarily.
A mortgage can make sense if you have a stable income, can comfortably afford the monthly repayments and have carefully compared different lenders.
The problem comes when someone takes the biggest loan they qualify for without considering what the repayments will do to their finances for the next 20 or 25 years.
A good mortgage should allow you to own a home without making your entire life revolve around loan repayments.
Paying extra can reduce the cost
One of the suggestions that came up in the discussion was making additional payments towards the principal.
If your mortgage allows early or additional repayments without significant penalties, paying more than the required monthly amount can help reduce the outstanding principal faster.
A lower principal means less interest can accumulate over the remaining period.
For someone who receives bonuses, business income or other extra money, using part of it to reduce the mortgage balance could potentially shorten the repayment period.
However, borrowers should first check their mortgage agreement and confirm how additional payments are treated by the lender.
Buying land and building slowly
Some Kenyans prefer a different approach: buying land first and constructing the house in phases.
Instead of taking a large mortgage, you can save money and build gradually, depending on your income.
For example, someone may start with the foundation, then build the walls, roofing and finishing as money becomes available.
The disadvantage is that construction can take several years, and building costs can change during that period.
But for people who want to avoid a large long-term debt, it can be an option worth considering.
What about buying an already-built house?
Buying an already-built house has its own advantages.
You can see the actual property before committing your money, and you can move in immediately if the house is ready.
Building your own home, on the other hand, gives you more control over the design, materials and size of the house.
The better option depends on your income, land availability, construction costs and how quickly you need a home.
So, should you take a mortgage?
There is no single answer for everyone.
A mortgage can be a useful way to become a homeowner, but it should not be treated like an ordinary loan. You could be committing part of your income for decades.
Before signing, compare the interest rate, repayment period, monthly instalment, total repayment, additional fees and early repayment terms.
Most importantly, do not borrow simply because a bank says you qualify for a particular amount.
Borrow an amount you can comfortably repay.
For some Kenyans, a mortgage may be the fastest practical route to owning a home. For others, saving, buying land and building gradually may create less financial pressure.
The real question is not simply, “Can I get a mortgage?” It is “Can I afford this mortgage without struggling for the next 15 to 25 years?”
