Renting vs. Buying Through Mortgage


If only you could see the future! If only you could picture where you would be in the next few years! If only you had an oracle, a seer, by your side, to whisper insightful words of wisdom in your ears! If only…

Well, if you asked some people about their experiences and they were honest, they’d tell you they wish they had invested in some property ages ago.

In hindsight, a former Kenyatta University (KU) student says he could have done better decades ago. While still in university, he lost a massive opportunity to make a fortune in real estate. He says had he had the knowledge then, he could have saved over time from his ‘boom’ – the semester allowance given to government-sponsored university students in those times – and invested in a plot near the university at Kahawa Sukari.

An acre was selling at Ksh35,000 when the then young man was studying at KU. It now fetches a cool Ksh30 million! That’s how much the land in this location has appreciated in just over 20 years.

A Nairobi pastor narrates the case of two wazees, retired congregants, who used to work in the city nearly two decades ago. They dreamt of owning houses in Lavington, a posh estate in Nairobi. Unfortunately, by the time they retired, they had not saved enough to buy property in that part of the capital city. They retired to their rural homes without owning any house in Nairobi.

They confess they wish they had taken a mortgage to buy at least one property.

The pastor says had they humbled themselves and invested in real estate in another part of the city, such as Buru Buru in Eastlands, today, their houses would be worth a lot.

In the mid-1990s, a house in Buruburu sold at Ksh500,000. Today, that same house goes for Ksh10 million or more! What a difference time has on property!

While the two senior citizens rue their decision not to borrow about 20 years ago, a senior executive who was working in Nairobi took a different route. He took up mortgages to buy houses in Lavington and Kileleshwa. At times, he would confide in his friends that he was swimming in a sea of debt. However, after he completed paying the mortgages and before retirement, the tide swung. He sold some of the properties and with the proceeds, built two commercial buildings that earn him handsome rent every month.

In neighbouring Kiambu, prospective buyers were offered the chance to buy 12 acres at Ksh1 million each 20 years ago. One of them who baulked at the price cannot believe the same land now commands over Ksh100 million an acre. The land touches Kiambu Road and is in a very prime area.

Today, many people in this country wish they had done things differently in the past. They were unable to peer into the future. But they could have helped shape that future.

They could have taken a mortgage and bought these properties that now command hefty prices.

It is never too late, though.

Why take a mortgage? Why not just be happy renting throughout a lifetime?

Remember, even if you pay your rent faithfully for 25 years, you will never own that property. In essence, you’re helping another person – the landlord or the landlady – to pay their mortgage, probably. When you pay your last rent and choose to move out, you cannot claim a share of the property.

However, if you saved some money as deposit for a mortgage, you’d be on your way to owning a house. Calculate how much rent you will have paid in 25 years and see if that would not have been enough to buy you a house.

Whether you get to own a house by buying with your savings or a mortgage, you put yourself in a position of enjoying the many benefits of owning your home.

Interested to learn more about getting a mortgage? Contact a RE/MAX agent and you will be guided by a professional.