Nairobi mortgage quote: 8.19% fixed for 5 years — how should I compare it?

R

readTheBench

Buyer
I have checked the quoted rate and fees, but I am still unclear which measure gives the fairest five-year comparison. The offer is 8.19% fixed for five years on a Nairobi purchase of about KES 27,740,000. It came out above the advertised rate after the fee structure and applicable loan-to-value band were taken into account.

Should I compare the cash paid by month 60 together with the remaining balance, or rely more heavily on APR? I also need to understand whether fees are paid upfront or added to the loan.

Portability and early-repayment charges could change the result because I may move or refinance before the mortgage ends. Which details should be made identical across the quotes before I compare them?
 
For a five-year decision, I would compare every cash outflow through month 60, then add the loan balance remaining at that point. The headline rate alone misses fees, while monthly payments alone can hide differences in how quickly principal falls. APR is useful, but only if each lender calculates it on the same assumptions.
 
What is the full loan term, and are all quotes based on exactly the same deposit and loan-to-value band? Without those two details, even identical five-year rates could produce different instalments and balances. I would also ask each lender to separate upfront fees from any charges added to the loan.
 
I would not dismiss APR too quickly. Total five-year cash paid can make a loan with lower monthly payments look attractive even when it leaves substantially more principal outstanding. Use APR as one comparison, but verify it against the payment schedule, fees and balance after five years.
 
Portability needs careful reading rather than a simple yes or no. Ask whether moving the mortgage would still require a fresh affordability assessment, valuation or change in pricing. If portability is important to you, find out what happens when the replacement property has a different value or pushes you into another loan-to-value tier.
 
A simple spreadsheet should settle most of this. For each quote, list: cash needed at completion, monthly payment, fees paid separately, fees financed, total paid by month 60 and outstanding balance after payment 60. Keep the purchase price, deposit, loan term and repayment basis identical. Then put early-repayment and portability conditions beside the numbers rather than trying to force everything into one percentage.
 
That method works, but only if Ana chooses the right comparison date. Five years makes sense for the fixed period, yet it quietly assumes she can refinance or repay then. If the likely outcome is staying with the same lender after the reset, the post-fixed pricing deserves at least a stress test.
 
Agreed. I would run two versions: exit at month 60 and remain beyond month 60. The first exposes arrangement fees and any early-exit cost; the second exposes rate-reset risk. There is no need to predict the future rate precisely—testing a few higher-payment scenarios is enough to see whether affordability becomes uncomfortable.
 
Also test affordability on household cash flow, not merely lender approval. Is the quoted monthly payment still manageable alongside ownership costs and an emergency reserve? Then increase the assumed payment after year five. A loan can win the five-year cost comparison and still be the wrong choice if the reset leaves no breathing room.
 
The loan-to-value point may explain much of the gap between the advertisement and the actual 8.19% offer. I would ask lenders to quote against the same borrowing amount and deposit, then request a second scenario showing whether a larger deposit changes the pricing enough to justify tying up more cash.
 
When requesting revised figures, give every lender the same short template: KES 27,740,000 purchase, intended deposit, full term, five-year fixed period and expected repayment pattern. Ask for the payment, all arrangement charges, amount actually advanced, balance after five years and costs triggered by selling, refinancing or making extra payments.
 
One more distinction: “early repayment” can mean small extra payments, a large lump sum, or clearing the mortgage entirely. The treatment may differ, so ask about each situation separately and whether limits apply during the fixed period. That matters if bonuses, a sale or refinancing could change your plan.
 
I would prioritise certainty if two offers are close. A slightly cheaper projection is not automatically better if it relies on refinancing after five years or on portability working exactly as hoped. Compare the realistic base case first, then treat a successful refinance as an upside rather than something required to make the mortgage affordable.
 
The useful answer is probably not one figure. Use total five-year cost plus the remaining balance for the financial comparison, monthly payments for affordability, and APR as a consistency check. Then eliminate any offer whose early-repayment, portability or reset terms do not fit your likely plans. That should make the 8.19% quote comparable with the advertised alternatives without letting the headline rate decide everything.
 
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