Getting a mortgage is better than renting
May 30, 2006
Mortgage has been the subject of discussion in the press lately. Patrick Asea’s article in Vision of March 21 raised interesting observations on merits and demerits of whether mortgage rates should be subsidised.
Joshua Onyait
Mortgage has been the subject of discussion in the press lately. Patrick Asea’s article in Vision of March 21 raised interesting observations on merits and demerits of whether mortgage rates should be subsidised.
Subsidised mortgage is good news to Uganda’s working people who are currently paying rent through their noses. I therefore think one of the best promises in President Museveni’s 2006 presidential election manifesto is the proposed tax deduction on interest payment on mortgages.
When this is implemented, many Ugandans, especially those living in Kampala and major towns, will have an opportunity to be home owners. It will also be an incentive for Ugandans abroad to invest in property at home.
Many Ugandans do not understand mortgages, just like insurance. By getting a mortgage, you become a home owner upfront. You pay ‘rent’ to your own house until you become the owner. The ‘rent’, which is payment to service your mortgage, however goes to reduction of the mortgage loan to zero over time.
This is better than living in a rented house where rent goes to the landlord. Another benefit is that the value of your property would have appreciated by the time you pay off the mortgage.
Also, many Ugandans do not seek expert advice when it comes to home owning. Not surprisingly, therefore, many get cheated. They buy land with dubious titles and get contractors who use substandard material. This has cost lives in cases where the houses have collapsed. These mishaps would not occur if expert advice were sought.
There is of course the question of how many people can qualify for a mortgage. What the banks and companies like Akright need is proof of employment and a predictable flow of income. The rest is ours to deliver. I would therefore say that many of Uganda’s employed people qualify for a mortgage. Besides, there are more who can afford to buy vacant plots to build houses of their choice and those who can buy completed houses. All these are on offer in the Ugandan market, although not many people are aware.
The lowest interest on mortgage in Uganda is currently 16 percent, offered by the Housing Finance Company of Uganda. This is still high by the standards of developed countries where interest to mortgage fluctuates between 4 – 8 percent. That is why the President’s promised tax deduction on interest to mortgage is very welcome news that should be implemented fast.
The writer is marketing manager, AKRIGHT Projects
Mortgage has been the subject of discussion in the press lately. Patrick Asea’s article in Vision of March 21 raised interesting observations on merits and demerits of whether mortgage rates should be subsidised.
Subsidised mortgage is good news to Uganda’s working people who are currently paying rent through their noses. I therefore think one of the best promises in President Museveni’s 2006 presidential election manifesto is the proposed tax deduction on interest payment on mortgages.
When this is implemented, many Ugandans, especially those living in Kampala and major towns, will have an opportunity to be home owners. It will also be an incentive for Ugandans abroad to invest in property at home.
Many Ugandans do not understand mortgages, just like insurance. By getting a mortgage, you become a home owner upfront. You pay ‘rent’ to your own house until you become the owner. The ‘rent’, which is payment to service your mortgage, however goes to reduction of the mortgage loan to zero over time.
This is better than living in a rented house where rent goes to the landlord. Another benefit is that the value of your property would have appreciated by the time you pay off the mortgage.
Also, many Ugandans do not seek expert advice when it comes to home owning. Not surprisingly, therefore, many get cheated. They buy land with dubious titles and get contractors who use substandard material. This has cost lives in cases where the houses have collapsed. These mishaps would not occur if expert advice were sought.
There is of course the question of how many people can qualify for a mortgage. What the banks and companies like Akright need is proof of employment and a predictable flow of income. The rest is ours to deliver. I would therefore say that many of Uganda’s employed people qualify for a mortgage. Besides, there are more who can afford to buy vacant plots to build houses of their choice and those who can buy completed houses. All these are on offer in the Ugandan market, although not many people are aware.
The lowest interest on mortgage in Uganda is currently 16 percent, offered by the Housing Finance Company of Uganda. This is still high by the standards of developed countries where interest to mortgage fluctuates between 4 – 8 percent. That is why the President’s promised tax deduction on interest to mortgage is very welcome news that should be implemented fast.
The writer is marketing manager, AKRIGHT Projects