The dilemma of whether to build or buy a house is something that goes through the mind of every prospective first-time homeowner looking to get their dream home.
This was no different for Paul Macharia, who recently accomplished his dream of owning a house at just 28. Macharia shared with Bizna Kenya that a previous encounter with a landlord pushed him to find his own space to call home.
Occasionally, he would face power disconnections over delayed rent. The problem was not that he couldn’t afford it but that his salary came in way past the 5th of every month, which was the cut-off date for rent.
“I realized that the confrontations with the landlord and the limitations as a tenant on what I could and couldn’t do were too many. This sparked a desire to have my own place where I could have all the freedom and luxury without anyone knocking on my door with demands,” he said.
Things aligned when Macharia, who is now a civil servant and a businessman, landed a new job with the government.
While many people think of buying cars after landing lucrative jobs, Macharia’s plan was to save for a house. While he had the idea of his dream house, the lack of enough capital blocked him from accomplishing his dream.
Macharia, who wanted a quick project, also realized that saving would take him long to complete the house. Things took a different turn when he shared his idea with his uncle, who is also his mentor.
The uncle, who also owns a mansion in Athi River and Nyeri, advised Macharia to go for a mortgage.
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Macharia, however, revealed that the idea of a mortgage sounded good and, at the same time, confusing, prompting him to visit one of the banks that offer mortgages for clarifications.
”The idea was good, but I had a lot of questions. I, however, knew I would do it when he (uncle) mentioned to me that Co-op bank mortgages are the best and I should try them.’’
”Personally, I have been banking with Co-op Bank for the last five years, and it’s so far my favorite bank. So I said to myself, why not?’’ he said smiling.
He would later visit one of the Co-op bank branches in Nairobi’s CBD to have all his questions answered. Among the things he wanted to know was whether he qualified for a mortgage and how much, as well as the mortgage duration and interest rate.
”They told me I was eligible for a Sh. 5 million mortgage plan. I have never been that excited in my life. That is when I began my journey of owning a home, and so far, it’s been a success,’’ he added.
Macharia says that he got the money on a reducing balance basis at a rate of less than 10 per cent.
“I opted to build instead of buying. That way, I would be able to customize the house interior and exterior design according to my taste,” he says.
His 4-bedroom mansion sits on two plots in Juja Kiambu County. The house itself spells class. It is secluded and fancy, and the compound is receiving some finishing touches.
Co-op Bank giving Sh. 500k to Sh. 8mn loans to buy, build home at 9.9% reducing balance
Macharia advised other young people to make good use of loans to make investments such as a home. Co-op bank has for years been a top choice for many homeowners when it comes to mortgage plans.
The bank recently announced a mortgage plan aimed at availing affordable housing to people who earn less than Sh. 150,000 per month, an indicator that the end goal is to increase homeownership among the middle class.
The beauty of this plan is that it is 3 per cent points cheaper than the average mortgage rate of 12.9 percent estimated by the Central Bank of Kenya.
In addition, the new Co-op Bank’s mortgage plan gives aspiring homeowners the option of either purchasing a ready residential house or buying a plot and constructing, just like Macharia.
“Whether you’re buying or building, we’ve got you covered with loans from Sh. 500,000 up to Sh. 8 million. Additionally, as a Co-op Bank customer, you can enjoy up to 90 percent financing for building and 100 percent for ready-built homes,” said Co-op Bank.
The purchased or constructed property will be the security for the loan, with the loan’s interest rate capped at 9.9 percent per annum on reducing balance.
The loan is open to both employed and self-employed individuals. The maximum loan tenure for employed applicants is 15 years and 10 years for self-employed individuals.
To be eligible for this plan, one must have a maximum household gross income of Sh. 150,000. They will also need to have at least six months of consistent banking with Co-op Bank.
For the properties around the Nairobi Metropolitan area, the bank will provide loans of between Sh. 500,000 and 6 million, and loans of up to 5 million for properties outside Nairobi.
Interestingly, top-up loans will be allowable under commercial rate and upon repayment of the primary loan for a period of at least 12 months.
