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6 Ways To Build Your Home Equity Faster in the Real Estate Market.

Wednesday, September 27, 2023 1:36 PM By Koch Properties

6 Ways To Build Your Home Equity Faster in the Real Estate Market.


Home equity, often overlooked by homeowners, can be their most valuable possession. Before purchasing a new property, it's crucial to consider your home equity.

With proper knowledge and strategic planning, you can unlock long-term benefits from your home equity, supported by trustworthy real estate agents. Maximise your gains and make informed decisions.

What is Home Equity?

Home equity refers to the portion of your home's value that you own and can increase over time. It is calculated as the market value of your home minus the outstanding mortgage amount. As a homeowner, it represents your interest in the property.

For instance, if you bought a property for KShs 1,000,000 with a 20% down payment and a home loan covering the remaining KShs 800,000, your current home equity would be KShs 200,000, which is 20% of the property's value. Although you are considered the property owner, your official ownership is limited to KShs 200,000.

But how does home equity become your interest? As the market value of your property appreciates over time, your home equity also grows.

Building your home equity is a wise investment strategy. By increasing your home equity faster, you can benefit from lower interest rates and seize more opportunities for earning.

When done correctly, building home equity can be a great long-term investment strategy. However, it's important to understand the local real estate market and how your actions will affect your home’s value. Here are six effective ways to increase your home equity faster in the Kenyan Real Estate Market. 

1. Choose the Perfect Home Loan - Kenyan Real Estate Market

When it comes to mortgage loans, homebuyers have various options to choose from. Your choice of loan should depend on factors such as your income, downpayment amount, and the house price.

When shopping for mortgage loans, it's important to consider factors such as income, down payment amount, and house price. Compare interest rates, terms, and lender requirements before making a decision.

Before making a decision, it's recommended to compare mortgage plans to find the one that best suits your needs. With assistance from a knowledgeable real estate agency, you can find a loan that suits your needs best.Find the right mortgage loan for you and your home-buying journey!

2. Make A Big Down Payment.

Making a larger down payment on your property will not only determine your initial home equity but also contribute to its growth over time. A larger down payment reduces the total amount owed to the lender and makes monthly payments easier to manage. 

This can be beneficial in the long run. Seeking guidance from an experienced real estate agent can help make informed decisions about investing wisely in your property.

Invest wisely in your property for a secure future!

3. Make Home Improvements - Residential Real Estate

Home improvements play a crucial role in enhancing not only the value of your home but also its home equity. By investing in renovations, you can create a more functional and aesthetically pleasing living space that aligns with your lifestyle and preferences. Prior to embarking on any renovation project, it is highly recommended to seek guidance from a knowledgeable real estate agent who can provide valuable insights and advice. Their expertise can help you make informed decisions to maximize the returns on these endeavors while avoiding overspending that may inadvertently diminish your home equity growth.

Even seemingly simple upgrades, such as adding attic insulation or replacing garage doors, can yield significant long-term benefits. Attic insulation improves energy efficiency and can lower heating and cooling costs, while new garage doors enhance curb appeal and provide better security. These small enhancements can contribute to the overall appeal and value of your property.

So, take the time to carefully consider these worthwhile investments in your home. With proper planning and guidance, you can ensure that your home improvements not only enhance your living experience but also yield long-term financial benefits.

4. Accelerate Your Monthly Amortisation 

Payment options depend on the country you live in. There are countries that offer monthly, bi-weekly, weekly, and even accelerated weekly and bi-weekly payments. Choosing the right payment method depends on your income and how much of it you are willing to dedicate to your monthly amortization.

Choosing a bi-weekly or weekly option means that you’ll be paying 13 months a year instead of just 12 months (do the math). Meanwhile, an accelerated option means that you’ll be paying an extra amount with each payment.

It might seem heavy for your pocket, but trust me, it will benefit you more long-term. These options will help you save on a huge amount of interest and help you build your home equity in a shorter time period.

5. Opt for a Shorter Loan Term 

Choosing shorter mortgage terms is often recommended as they lead to lower interest rates and more money being devoted towards principal payments. This, in turn, results in building more equity faster over time. Instead of waiting years later when more interest has been accumulated due to longer term loan plans, it's advantageous to opt for shorter terms.

In Kenya, there are various loan plans available from lenders companies operating in the residential real estate investment market. However, before committing ourselves to one option, it is crucial to carefully assess our income to ensure that the higher monthly payments associated with shorter term loan plans do not burden our wallets. By considering these details, we can make an informed decision that aligns with our financial goals and aspirations.

6. Hold On To Your Property And Wait For Your Home Value To Rise 

Investing in real estate is often seen as a good choice due economic growth & high returns it promises investors while taking advantage of trends present in local improvement & Neighbourhoods brought by new homes construction projects being undertaken by companies operating in Kenya's property development industry landscape today .

By holding onto our properties for extended periods we can reap benefits when property values appreciate over time , but before selling our properties at higher prices we should consult with a professional Real Estate Agency for accurate valuation & expert guidance so we make informed decisions that align with our financial goals & secure prosperous future through real estate investment - They possess the expertise to assess your current home value accurately and provide valuable insights on the best time to sell.

Conclusion - Real Estate Investment

Building home equity may seem overwhelming at first, but with proper planning, dedication, and a long-term perspective, it can become a rewarding endeavour. Trusting a reputable Real Estate Agency for guidance will provide you with valuable expertise and insights throughout the process.

By following these six steps, you can not only maximize the long-term benefits of your home equity but also establish a solid foundation for your financial future. Your home equity should be viewed as more than just a simple asset; it is an investment that can serve as a valuable savings account. It offers you the flexibility to leverage its value for various purposes, such as retirement funding, covering emergency expenses, or even renting or selling your home when the time is right.

Furthermore, building home equity at an accelerated pace allows you to unlock the full potential of your investment. As the value of your property appreciates, you not only enjoy the comfort of a well-maintained home but also witness the increasing worth of your property. It's a win-win situation that offers both the satisfaction of a comfortable living space and the financial benefits of a growing asset.

To embark on this journey of building home equity, all you need to do is start planning, leverage the expertise of a reliable Real Estate Agency, commit to your goals, and consistently care for your home. By taking these steps today, you are setting yourself up for a brighter and more secure future.