According to a  recent survey , 71.1% of houses sold in Kenya last year were apartments, with mansions and bungalows contributing 23.4% and 4%, respectively. The analysis found that many people preferred buying apartments despite the poor state of the economy caused by the COVID-19 pandemic. The report also highlights the high priority of buying a house for most of the population, regardless of the prevailing economic situation.

A successful home-buying process takes work. Given the huge amount of capital and time involved, ensure you make the right decision to get value for your money. There are various vital considerations and details you need to get right from the get-go. This guide will help you navigate the home-buying, saving you money and time. Read on. 

1. Determining What You Can Afford 

Buying a home involves a huge financial outlay, so you need proper budgetary mechanisms to ensure you operate within your budget. Purchasing your dream home requires efficient strategies that will help you prepare the funds needed for this vital procedure. For example, you can plan to have various income streams, such as passive or active when buying a house in Kenya. 

For employed people, this essential objective can be achieved by saving part of their salary in a bank savings account. However, you must ensure your bank can offer you a mortgage loan to help make your dream a reality. Also, it would help if you had multiple ways of making money to boost your main income source to avoid straining your lifestyle when saving to buy a new home in Kenya. 

You must thoroughly research how much you need to save by checking the prevailing home prices at your preferred location. Since most banks in Kenya need their customers to  save at least 10% to 20% of the property value, you can accurately estimate how much you need to save monthly to realize your dream of owning a home. Apart from the down payment, there are various things you need to budget for when planning to buy your first home plus you need to know what documents do you need to buy your first house?. 

These expenses include:

• Legal Fee: When buying a home, you need a lawyer to meet all the required prerequisites. Do you understand what documents do I need to buy my first house? The amount you will pay for legal services varies depending on one lawyer to another. However, the legal fee charges in Kenya ranges from 1% to 5% of the total house price with a minimum average of Kshs 35000. You need to know how to calculate legal fees in Kenya when buying a house. 

• Mortgage Fee: This refers to the interest rate charged on the mortgage loan the bank provides. The rate is normally between 12%-14% per year, depending on the bank you select. Apart from the mortgage fee, you must pay a loan processing fee of 1% of the principal amount plus a valuation fee of around 0.5%. 

• Home Insurance: You must insure the property against various elements, such as fire, that can ruin your investment. Depending on the insurance company and your chosen package, you will need at least Kshs 5000 annually to insure your house. 

• Stamp Duty: It is a tax you are required by law to pay to the Ministry of Lands. The fee varies from 2% to 4% of the property value, depending on the property value. The amount is paid through the Kenya Revenue Authority. 

• Title search: Title search is important to ensure the person selling the home is the owner and thus helps avoid fraudsters. You can easily verify this information online by visiting the  eCitizen digital platform , but you must pay a small fee of Kshs 500. 

• Additional Costs: In addition to the abovementioned expenses, you need to consider costs such as home inspection, utilities such as electricity, moving, and maintenance. 

Apart from the financial considerations, you must find a house that meets your desired criteria. Some of the vital factors most people consider when purchasing a house include the location, size, and the roofing type.  It is, therefore, advisable to work with a real estate agent since they have many homes for sale in their portfolio, and by engaging their services, you can easily find the best house that fits your unique requirements. 

2. Buying Using Cash or Mortgage 

If you have enough money, then it is advisable to buy in cash because of several reasons, such as: 

• Cash payments are more likely to give you a good deal than other home-buying methods, such as acquiring a loan. They also give you a better bargaining position than credit purchases. Exploiting this opportunity can get you a great discount on the price of the house. 

• You also spend less long-term since you are not paying mortgage interest. 

• Finally, if you are bored with the home, you can sell it faster than a home bought using a mortgage. 

The only disadvantage of cash payments, instead of bank financing, is that they require huge sums of money. Cash payment when buying a house can tie up your resources, leaving no room for you to consider other money-generating investments or cash for emergencies. With this in mind, many people prefer a mortgage alternative to cash payments. 

When you are considering loan payment, you need to understand the two main types of mortgage plans: 

1. Fixed-Rate Mortgage: This home financing option guarantees a single interest rate on the mortgage for the entire loan term. Once locked in by the bank, the interest rate you must pay does not fluctuate regardless of market conditions.  

2. An Adjustable-Rate Mortgage (ARM): This type of bank financing is one in which the home loan has a variable interest rate. With an ARM, the interest rate on the mortgage can change periodically depending on the performance of a particular benchmark. However, some caps restrict how much the interest rate can rise yearly during the mortgage's lifetime.  

The ARM financing option is smart for homebuyers planning to keep the mortgage for a short period and have the financial ability to afford any potential increases in their interest rate. However, before you apply for an ARM mortgage, you need to find out how much monthly payments you will be required to pay, if there is an interest rate cap on the loan, and how the rates are likely to rise. 

In most cases, an individual can choose the type of mortgage loan that best suits their needs and financial budget to ensure easy repayment and peace of mind. 

Advantages of mortgages 

There are various advantages of buying your home via a mortgage. These benefits include: 

• With a mortgage home payment plan, you can stay financially liquid. Thus, you can consider other investment opportunities, such as the stock market or bonds. 

• When buying a house using the mortgage method, you must only pay about 20% of the property value. This favorable offer will give you extra cash for home inspection and repair expenses. 

• Banks usually charge an average rate of 14% per annum on loans, but you are free to decide how long you will make the repayments. Longer repayment periods generally offer great flexibility to the homeowner because they offer reasonable monthly payment amounts. 

Disadvantages of mortgages 

Unlike cash payments, bank loans have various disadvantages for prospective homeowners. These limitations include:

• In addition to the principal amount, which in most cases is the price of your dream house, the mortgage also accrues interest. Depending on your monthly payment amount, you will have a huge debt to clear for a long period. 

• If you cannot pay the mortgage, you risk losing the house since the loan is secured against the property.

• Additional charges, such as valuation and processing fees, will increase the significant amount you owe the bank. 

3. Finding Your Perfect Home Design Style 

Buying a house is a significant investment not only for the present but also for the future. It is, therefore, important to ensure the design of the house you select works for you and your family, which tends to grow with time. When choosing the perfect home design style, you need to ask yourself these vital questions before making the final decision:

• Do you require space for the children to play outside? 

• When you have guests come over, how do you plan to host them? Inside the house or in an open space? 
• Will your furniture fit into the floor plan available in the new house? 

Answering these vital questions will help you make a prudent choice when selecting a house that will suit your budget and lifestyle now and in the future. Finding a property whose design fits your needs also ensures you don't need to spend additional money re-decorating the house after purchase to meet your requirements. 

4. Mode of House Hunting 

With technological advancements, homebuyers have varied options when searching for a house, unlike traditionally, when physical house-hunting was the only method available. Physical house-hunting is not only time-consuming but also tedious. A prospective homebuyer can hire a real estate agent or search online conveniently using their smartphone or laptop.

Using a Real Estate Agent

If you want a faster and easier home-searching process, hire the services of a real estate agent. A real estate agent with diverse market knowledge, such as prevailing house prices, will be useful when negotiating with the home seller. Therefore, there is a high probability of getting the best deal when you hire an agent instead of working alone when buying your first home. 

Also, due to their extensive real estate industry knowledge for instance, the house shopping list in Kenya, a realtor has access to many homes on the market, even the ones that have yet to be advertised. Because of less competition, hiring a real estate agent makes it easy to get your dream house and get the best deal possible in terms of the price of the house. The real estate agent will charge a fee not exceeding 3-6% of the home value for the services rendered. 

This fee is split between the homebuyer and the seller or, in some cases, paid in full by the person selling their home. Therefore, the prospective home buyer needs to seek initial clarification from the agent before enlisting their services. 

Searching Online 

Apart from hiring a realtor, prospective homeowners can also consider other methods of house-hunting, such as searching for a home online. From the convenience of your home or office, you can look for a house that suits your needs. You can also filter your search results to only include specific price ranges, house sizes, and home locations.

For the best experience when house hunting online, check out the Home2Home website. You can also contact them directly via the indicated phone numbers, and their customer representatives will ensure you get the right home that matches your needs.

According to the  2019 house price index , many people buy townhouses outside Nairobi because living costs are more affordable than in the Nairobi metropolitan region. However, it is important to remember that house prices usually depend on the property's location thus you must understand house shopping list Kenya. 

5. Planning a Home Inspection 

For first-time homeowners, it is easy to rush to make an offer when looking for a house to buy, especially after locating the property that fits their needs by only considering visible aspects. But taking your time and ensuring the house is in good shape before making an offer is advisable. In most cases, the problems with the property are only evident when you do a thorough home inspection before making the final decision. 

You, therefore, need to hire a professional home inspector to assess the following: 

• The safety of the property. 

• Insulation and ventilation of the house.

• Interior plumbing of the home, including leaking pipes and the electrical system. 

• The construction mechanism of the property, such as floors, ceilings, walls, and drainage system of the area, should be designed to avoid future risks of flooding. 

After a thorough home inspection, the inspector will prepare a detailed house report indicating the various problems possibly found in the property. Depending on the home inspection report provided by the home inspector, you will decide whether to negotiate for a lower house price, have the seller make the necessary repairs, or continue your house-hunting process altogether by exploring house shopping list Kenya. 

Ready to Purchase a Home? 

Considering the important factors discussed in this guide, you will be in an excellent position to begin your home-buying process. With the right information, for instance, understanding the house shopping list in Kenya and real estate industry market research, you can make the best decisions to ensure a successful home-buying exercise. Contact Home2Home today for the ultimate home-hunting search online!