Borrowing from I&M Bank

Kenyan banks must disclose the total cost of credit, and there is an industry calculator at costofcredit.co.ke, which I&M links from its own footer.

Use it, because the headline rate is not the cost. Add the arrangement fee, excise duty on that fee, credit life insurance, and for secured lending the valuation and legal costs, and two loans quoting the same rate can differ by a large number over the term. Put the same amount and term in for each lender and compare the totals. Our repayment calculator and amortisation schedule show where the money goes.

Home loans carry costs that are not the deposit and are payable in cash: stamp duty, legal fees for both sides, valuation, the arrangement fee, mortgage protection and fire insurance, and search and registration. Together they routinely add several percent of the purchase price.

Ask whether the rate is fixed or floats, and if it floats, what it is pegged to. On a twenty-year loan that question matters more than the opening quote. Model it at two or three points higher and check you could still service it. Our mortgage calculator takes whatever rate you are actually quoted.