Oi, Grow Up and Get a Mortgage Already!
A few weeks ago, over chapattis and beans in the outskirts of Kigali, Janvier Rutsobe (JR) and I talked for hours about the whole ordeal of owning home. It’s a personal goal to own a home before I hit 35 or put a ring on someone from somewhere (poor girl!) JR wants the same thing but we strongly disagree on the approach. JR believes that it can be done without taking out a mortgage; he cringes at debt and regular payments. This friend of mine is quite sophisticated and armed with excel models that show how banks make a killing on mortgages. For an RWF 30 Million mortgage, a typical bank in Rwanda makes upwards of RWF 20 Mill. in interest payments. See his point? If yes, stop reading right now. If not, continue to the next paragraph.
To give you context, you curious pr*ck, the two of us are in our mid-twenties but we behave like 40-year olds with no apparent signs of Retour d’âge. We want to be financially independent early and make a lot of babies—don’t you dare being judgmental; we all have different raison d’être. The bottom line is that we are all still trying to figure out this whole owning-a-house puzzle here in Rwanda. Kigali keeps getting expensive. The former slums are now high-end neighborhoods, case in point, try buying a house or land in Kagugu or Bann**he! A fully built house in Kagugu can easily cost you RWF 80 Mill., in Kanombe, RWF 55-75 Mill., and in Kimironko RWF 60-150 Millions. If you are one of the ambitious types, buy a piece of land and build one. It might run you RWF 40-60 M., but you will lose your head or rip your heart out in the process (read: it is not for everyone, and who has the time anyway!) The point I am trying to make here is that building your own house sounds good and reasonable until you try it.
Now, let’s talk about finances again. When you take out a mortgage, you will most likely be asked to pay a 15%-17% interest for 15-20 years, but guess what? You will have a house in the end. And if you find an appealing offer mid-way, you can always sell, pay the bank, buy a new pair of basketball sneakers, contribute to your local brewery (BRALIRWA)’s bottom-line, and have a balance to invest in a new property. On the flip side, if you choose to continue paying rent to a landlord who gives zero care about damaged water pipes or non-existent electricity in your room, you will have nothing after five years, except bad memories and fewer friends. After 20 years, you will want to hang that landlord too!