The first time I said that every banker should own a house in the presence of my wife, she looked at me stunned and she refuted my claim. I went on to explain my point.
You see, if you work for a bank, you have many privileges that the rest of us don’t. Take an example of buying a two-bedroom apartment off Mombasa Road or in Ruaka, a few kilometres from Village Market and near Runda Estate, which would cost about Sh4.5 million. This would be an ideal house for a young family. Let’s also assume you can raise a 20 per cent deposit for the house and the mortgage term is 20 years.
Here are the reasons I gave her.
Majority of the banks accord employees mortgages at below market rates – some for as low as five per cent per annum. For the house mentioned above, mortgage repayments would be about Sh23,000 per month. If you got a tenant and charged a reasonable rent of Sh20,000 monthly, you would only have to part with as little as Sh3,000 from your pocket to top up on mortgage instalments. If you decide to live in it, you would treat the instalments as your monthly rent; consider how much rent you pay and yet the house will never be yours.
Bankers have privileged information about houses lined up for auctioning. Such houses will in most cases be priced at 30 per cent lower than the market rate.
If the banks are willing to lend 105 per cent mortgage to ‘the rest of us’, wouldn’t they be willing to give you better offers considering you work in a bank?
Some developers are financed by banks. Being privy to the due diligence conducted by the bank, your employer, why wouldn’t you have the confidence of purchasing one of the units off-plan and save maybe up to a third on the final sale price for complete units?
We live in a generation where we want instant things. We are impatient. They say “ikiwa sio sasa, ni sasa hivi” (loosely translated to mean that ‘if it’s not now, it’s right now’).
With real estate, you have to be patient. If you don’t want to work as a banker for all the 20 years of the mortgage, you could make lump sum payments over time and finish your repayments in maybe 10 years or less.
Civil servants in higher pay grades also fall in the category of bankers. The government offers staff mortgages at negotiated rates of about five per cent annually. Some blue chip companies have also negotiated interest rates for their staff. These are opportunities.
Remember, when you join the ‘real world’ out there, interest rates are as high as above 18 per cent. You better beat this while you can. What will be your story 10 years from today?
Wawerù is a real estate expert and author of ‘The ABC of REAL estate investment in Kenya’. Email: info@kariukiwaweru.com
