Do Home Owners prefer to acquire Homes via Mortgages or normal Bank loans?

Introduction

I vividly remember having worked for the first five years in my professional career and suddenly got tired of opening the door to confront my land lord, and later on, my housing agent. Many are the times when I would put my hand in my pocket, reaching out for my wallet only to realize I was yet to earn, or the land lord had showed up too early. This experience left an unpleasant feeling in my stomach followed by a deep urge to permanently terminate my land lord’s monthly visits to my door steps. It didn't take long before I started contemplating owning my own private home.

Benefits of owning a suburban home

Privacy

Life in suburban areas is quiet and private. There are no rude intrusions as is common in flats and urban dwellings. You can avoid, in a literal sense, stepping on other people’s toes. There is a lot of space that allows people to indulge in favorite ventures or occupations. I like viewing my trip to my house like going on a quiet holiday each evening, especially Friday evenings after doing all the shopping I need for the weekend. I at times dread waking up to the noisy rude city every Monday morning.

Peace of mind

There is peace and tranquility for those who love the comfort offered by suburban environments. The persistent humming of automobiles and other cacophonies of mixed mechanical sounds that trade mark urban life are very rare and almost absent depending on your distance from large towns.

Freedom to design to satisfaction

Wouldn’t it be nice to have your sitting room, lounges, dining room, bedrooms, kitchen, stores and garage located in the most appropriate location and in the right dimensions? This is the advantage that comes with the freedom to design your home, instead of living in pre-determined space. I prefer designing my own house to the smallest details using computer software that draughts in three dimensions. This enables me to position objects and even plants in the most convenient of locations prior to construction. Modern software enables a person to walk through the entire 3-dimensional blueprint of the house, examining all the locations where you prefer your rooms and furniture to be located and making changes where necessary. Both 2-dimensional and 3-dimensional landscaping options are also included in the home-design software for home owners to practice their draughtsmanship before the actual construction takes place.

Agricultural practices

A home can provide an opportunity to practice your farming skills in larger proportions to your personal satisfaction compared to the limitations of a town house. I have been able to grow 75% of foods required by my family in the house in half an acre of land. One is also able to change the kind of flowers one needs on an annual basis. You have an option to rare big animals or keep poultry that supplement your meals. I have been able to grow my own corn, beans, pumpkins, onions tomatoes, lettuce, kale, spinach, coriander, chilies, parsley, carrots, potatoes, bananas, mangoes, avocado, guavas, pawpaw, lemons, oranges, passion fruits, granadilla and mushrooms.

A touch of nature

Owning a home in suburban regions has its own rewards that tend to be scarce in urban setups. The clear unobstructed spectacle of the rising sun floods your heart with joy early in the morning, preparing you to face the day’s vagaries. You wake up to the singing of all manner of birds and bountiful supplies of clean air in an open blue sky. The greenery that punctuates the landscape is rewarding in beauty when contrasted with the city’s jungle of concrete and steel. The smell of iron in the soil has a sobering effect when it rains. Flora and fauna encroach upon your natural habitat. There are times when I relish fighting to keep nature out of my house.

Flowers to grow at home - by the author
Flowers to grow at home - by the author

Demerits of owning a home

There are very few demerits of owning a home. The greatest setback I experienced was travelling to work in town and back each day while contending with traffic jams. Transport in the absence of your own means can be a bit expensive. I also have to arrange for security if I had to travel to distant places for leave, not to mention paying somebody to take care of my pets and poultry while I was away. You also have to take care of your garden, flower gardens, lawn and fence apart from keeping your house pleasant enough according to your personal standards.

Sources of finance for home owners

The most common sources of finance to home owners are mortgages and loans. It all depends on one’s financial capabilities. When confronted with the option of choosing between a mortgage and a loan as a source of finance, I quickly preferred the later. I wanted to build my own house instead of buying a ready-made house.

Corn to grow at home - by the author
Corn to grow at home - by the author
Bananas to grow at home - by the author
Bananas to grow at home - by the author

The Mortgage option of financing a home

The option that mortgages offer to aspiring home owners has helped many workers to own homes. There are times when a mortgage offers the best available opportunity to an individual when compared to other options. Mortgages come in handy where an investor can only afford to pay small premiums over a very long period of time. The life span of a mortgage crowds out other worthy investment opportunities that show up during the payment period, thereby enslaving the mortgagee.

Unfriendly interest rates levied by financial institutions that are controlled by government regulators and highly unpredictable volatile markets are some of the reasons why many people stay clear off mortgage portfolios. Frequent market fluctuations make interest rates unaffordable to many workers.

A mortgage may offer a scheme where a worker is expected to chip in 30% of the cost of the package with the lending institution settling the balance, which is then recovered in 10, 20 or 30 year period, depending on terms of the contract. Modern mortgage companies offer many varied products which include:

  • The purchase of homes through owner occupier mortgages
  • Land purchases
  • Property investment through project finance and residential facilities
  • Equity release products
  • Normal pre-agreed mortgage portfolios
  • And many other options

Avocado to grow at home - by the author
Avocado to grow at home - by the author

Affordable Loans for home owners

Bank loans

Bank loans are good due to the speed that comes with the acquisition of the credit facility and one’s ability to accomplish projects in the shortest time possible. The only deterrent issue might be the cost of securing the loan we need.

The number of banks in the market offer credit opportunities at varied interest rates. It is wise to shop around for the most affordable credit facility instead of jumping into the first bank we encounter.

A fence to grow at home - by the author
A fence to grow at home - by the author

Savings and Credit Cooperative Societies (SACCOS) Loans

For those who have had time to compare, you must have discovered that Savings and Credit Cooperative Societies (SACCOS) often offer cheaper loans pegged to better affordable terms compared to what commercial banks have to offer.

I have found myself attaining most of my objectives after financing my major projects via loans offered by SACCOS instead of banks. The only hitch is enrolling with the society (if you are attracted to the services offered by the society) and saving with them for a minimum period of six months. This varies with each society.

Savings and Credit Cooperative Societies offer added benefits of catering for members’ welfare. Banks often fall short of this benefit to workers. The interest rates offered by Savings and Credit Cooperative Societies cannot be compared to interest rates offered by banks. These societies have the lowest interest rates.

Conclusion

Do home owners prefer to acquire homes via mortgages or loans? The most common sources of finance to home owners are mortgages and loans. But it all depends on one’s financial capabilities. When confronted with the option of choosing between a mortgage and a loan as a source of finance, which option would you go for?

For most investors, this depends on one’s goals and objectives. Mortgages have benefits in as much as loans do too. The question is ‘How fast do want to attain your goals?’ Mortgages take long to service where loans take a short time but come at great expense. Either way, you will finally attain your goal. The choice is yours.

Please give your opinion

Do you normally opt for a mortgage or a bank loan to finance your housing projects?

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