Many Kenyans often get stranded as they try to navigate through a myriad of mortgage plans being offered by different institutions in Kenya. Generally, different financial institutions have different funding features and it is up to you to do your analysis and find out which plan will work best for you. This post will take you through a summary of the characteristics of a good mortgage product so that your task of looking for a good plan is made easier.
Stick to the end!
Characteristics of a good mortgage product
A good mortgage should have features that make homeownership affordable and achievable for borrowers. Here is what you should consider as you evaluate a mortgage loan:
#1. Competitive interest rates
A good mortgage should have competitive interest rates. Make sure financial institutions don’t capitalize on your lack of information.
#2. Low closing costs
Closing costs are fees paid at the closing of a real estate transaction. In this case, closing costs are incurred by you, the buyer of a housing property. These costs can add up quickly and make a mortgage more expensive than it should be. Therefore, a good mortgage product should have low/affordable closing costs.
#3. Reasonable payment terms
As you negotiate with your lender, you should both come to a logical understanding of payment terms. Good mortgages have reasonable payment terms. Both the lender and loanee should be satisfied by the mortgage plan.
#4. Flexible payment options
A bank or any other mortgage lender should offer flexible payment options. For instance, in a situation where your cash flow is not steady, you and your lender may opt for an adjustable mortgage instead of a fixed-rate loan product.
#5. No prepayment penalties
No institution should penalize you for paying back your loan early. The earlier you pay, the cheaper it should be for you.
Overall, a good mortgage product should entail the five main features stipulated above, i.e., affordability, manageability, flexibility etc. Shop around and compare different mortgages to find the one that suits you best.