- Intended use of the property
How do you plan on using the property? Is it for immediate development/settlement or simply for speculation? Is it for residential or investment use? With this in mind, the property buyer is able to narrow down to fewer and more precise options in terms of location, price of the property, property type, and so on.
Factors to consider when choosing property according to its intended purpose:
For a residential property: accessibility, services such as connection to water, electricity and garbage management, and proximity to social amenities such as schools, churches, hospitals, shopping centers among others.
For a commercial property: ensure that the property is easily accessible and near social amenities such as good roads, shopping malls, offices, and others that would make it attractive to potential tenants.
If buying a parcel of land for development: consider public and private utilities, topography, and soil type of the land as these have a direct correlation to the cost of construction, the character of the neighborhood and population as these also influence the value of the property and the rate of appreciation.
- Source of funds
After deciding on what you’ll do with the property, its time to address the financial aspect. Before committing to buy a property, evaluate your financial situation to ensure that the planned investment does not adversely affect your financial position. Plan accordingly considering the additional costs that come with purchasing a property including transfer and registration fees, valuation costs and legal fees. These funds need to be set aside since they are over and above the property purchase price. If financing the purchase through a loan, note that financial institutions are likely to finance a certain
percentage (usually between 50% and 90%) of the sale price, therefore you will be required to make a down payment. It is also important to note that the purchase transaction could take up to 90 days to complete.
- Legal ownership of the property
Funds are in order however there are still some factors to consider. Before buying a property, it is always wise to carry out enough due diligence to avoid dealing with illegally acquired property or unscrupulous and fictitious sellers:
Ensure you obtain copies of the title deed/ Lease title/ Lease documents – these can be freehold or leasehold. In case of leasehold consider the balance of the lease in years. It is advisable to buy a property that has 25years + to the expiry of the lease title
Conduct a search and inspection of the title – Visit the lands registry in the respective region and conduct an official search of the property. Here you will need a copy of the title deed. The search is important as it shows the real owner of the land in question and it also shows if there is any caveat put against the land, for example – claim on land by other parties.
Ensure land rates and rents and any other outstanding bills related to the property such as water and electricity are paid and are up to date before the property is transferred. Once you have established that the property is free of encumbrances and other legal issues:
Engage a competent lawyer to prepare the offer letter and sales agreement. In cases where the Sales agreement/Offer letter is prepared by the seller’s advocate, it is advisable to have your advocate review for the correctness and to ensure that your interests are well addressed.
Ensure a valuation of the property is done, for purposes of assessment of stamp duty. Stamp duty is paid upon the valuation of the property by a government valuer, after which registration of the title in your name shall be done and transfer of ownership will have been deemed complete.
Last but not least, It is important to have an insurance cover for your property especially if you have purchased a home, built a home or purchased a commercial development. With an insurance cover in place, the risks of fire, flooding and other unforeseen eventualities are mitigated as the insurer would restore the property to its former state. If financing the purchase through loans, it is mandatory to have a life cover in place so that in the event of the death of the property buyer/borrower, the insurer clears the outstanding loan and the property reverts to the next of kin. Insurance is one factor that is often ignored by most investors but has proven to be an essential part of purchasing a property.
ACTUALIZE YOUR DREAM
Once you have taken all factors into account, you can now fulfill your dream of being a homeowner. You can also do it via our very own Good Homes Mortgage.
Our Good Homes Mortgage takes all these into consideration and ensures you get value for your money.
With Good Homes Mortgage, you get:
- Affordable mortgages to Kenyan Individuals, Small Businesses, Investment groups, Saccos and Private Companies. The mortgages are available to local residents and Diaspora (in KES, USD, GBP and EUR) for purchase, construction, or renovation purposes.
- Bank-approved residential and commercial properties in various parts of the country through the Property Hub. You can view the property listing at www.goodhome.co.ke OR visit the Property Hub at KUSCCO Plaza in Upperhill, Nairobi.
For more information call 0711049739/696 or visit www.goodhome.co.ke