If you’re thinking of buying a home this year, you may be wondering how much money you need to come up with for your down payment. Many Real Estate Developers in Kenya ask for 20 per cent of the purchase price. While there are plenty of lower down payment options available for qualified buyers who don’t want to put 20% down, it is important to understand how a larger down payment can have great benefits too.
Here are the reasons why putting 20% down is a good plan if you can afford it.
1. Smaller balance. A larger down payment means starting out with a smaller payment balance, which has a few advantages. One of these is that it creates a cushion to preserve equity in your home even if Kenyan Real Estate market values decline. That could make the difference in being able to refinance or sell your home in the years ahead.
2. Positive budgeting experience. Saving for a down payment may be challenging, but it will also allow you to practice the budget habits you will need in order to make your ongoing monthly payments.
3. More manageable monthly payments. Your monthly payments will be much lower if you start off with a larger down payment.
4. You will end up paying less for your home. The larger your down payment, the smaller your balance. If you’re able to pay 20% of the cost of your new home at the start of the transaction, you’ll only pay interest on the remaining 80%. If you put down 5%, the additional 15% will be added to your loan and will accrue interest over time. This will end up costing you more over the lifetime of your home payment period.
If you are looking to buy your first home, you will want to consider the benefits of 20% down versus a smaller down payment option.
If you are thinking of buying a home and are already saving for your down payment, reach out to trusted Regional Sales Experts who can help you decide what fits best with your long-term plans.