Many people spend months saving for a house deposit, believing that once they have enough, they are ready to buy their dream home.
Then reality sets in.
They discover several other costs need to be paid before they can collect the keys. Some buyers even find themselves delaying the purchase because they hadn't budgeted for these expenses.
The good news is that these costs shouldn't come as a surprise. If you know what to expect early enough, you can plan for them and avoid unnecessary financial pressure.
That's why we built PrimeVale's Mortgage Calculator to do more than estimate your monthly mortgage repayment. It also helps you understand the upfront costs involved in buying a property, giving you a more realistic picture of the amount you'll need before moving into your new home.
Buying Off-Plan? You Won't Pay Everything at Once
If you're buying an off-plan apartment, there's some good news.
Most of these costs are not paid immediately after booking the property. Instead, they become payable once the development is complete and you're preparing to take ownership.
Legal fees will normally be paid when you're signing the sale agreement and other conveyancing documents with your advocate.
Stamp duty is generally paid later, during the transfer of ownership, before the property is registered in your name. And this is done when the project is complete.
Valuation fees only apply if you're financing the purchase with a mortgage. The bank will require a professional valuation before approving and releasing the loan. If you're buying the property entirely in cash, there is usually no lender-required valuation fee.
Understanding when these costs become due helps you plan your finances better, especially if you're buying a home that will only be completed in the next one or two years.
Your Deposit Is Just the Beginning
The deposit is usually the largest upfront payment you'll make.
Depending on the lender, you'll often be expected to contribute between 10% and 20% of the property's value, although some lenders may require a higher deposit depending on your financial profile and the property you're buying.
For a property worth KSh 10 million, a 20% deposit would be KSh 2 million.
Many buyers stop their calculations there.
But that's only one part of the story.
Stamp Duty
One of the biggest costs that catches first-time buyers by surprise is stamp duty.
Stamp duty is a government tax paid when transferring property ownership.
The amount depends on where the property is located.
Generally:
Properties within municipalities (urban areas) attract 4% of the property's value.
Properties outside municipalities (rural areas) attract 2%.
For a KSh 10 million apartment in Nairobi, stamp duty alone is KSh 400,000. That is a lot of money.
While this isn't usually paid when booking an off-plan property, you'll need to budget for it before the property is transferred into your name.
Legal Fees
Buying property involves lawyers acting on behalf of both the buyer and the lender.
Your advocate will carry out due diligence, prepare and review documents, register the transfer, and ensure ownership is legally transferred to you.
Unlike some of the other costs, legal fees are typically payable much earlier in the transaction, as your advocate begins handling the legal documentation.
Legal fees will vary between 1% and 3% of the value of the property.
It's a necessary cost that protects your investment.
Valuation Fees
If you're buying a property through a mortgage, your lender will require an independent valuation before approving the loan.
This helps the bank confirm that the property's market value supports the amount you're borrowing.
The buyer normally pays the valuation fee as part of the mortgage application process.
However, if you're purchasing the property entirely with cash, a lender's valuation is generally not required, meaning this particular cost may not apply.
Mortgage Registration and Other Charges
It does not stop there. You may also encounter additional costs such as:
Mortgage registration fees
Search fees - to search for the land details of where the project sits on
Bank processing fees
Insurance premiums required by the lender
Don't Forget Insurance
Most mortgage lenders require at least two types of insurance before releasing the loan.
These typically include:
Home insurance, which protects the property against risks such as fire and certain types of damage.
Life insurance (or mortgage protection cover), which helps ensure the outstanding loan can be settled should the unexpected happen.
These policies protect both you and the lender and should be factored into your homeownership budget.
The Cost of Moving In
Once you've completed the purchase and its time to move into your home, there are still some extra expenses waiting.
Moving services
Furniture
Kitchen appliances
Curtains and blinds
Internet installation
Utility deposits
Minor repairs or improvements
It's not unusual for buyers to spend several hundred thousand shillings preparing a home after receiving the keys.
Planning for these costs in advance makes the transition much smoother.
Buying a Home Is Easier When You Plan Ahead
The more informed you are before making an offer, the fewer surprises you'll face later.
Do not feel the pressure to hurry this process. This, to many people, is the most expensive financial decision you will make in your life, so it needs to be done right.
Use PrimeVale's Mortgage Calculator to estimate both your monthly mortgage repayments and the key upfront costs involved in buying a home. Once you have a clear picture of your budget, you can start browsing apartments and houses for sale with confidence, knowing you're financially prepared for the journey ahead.
