How to shop for a mortgage in Rwanda

With dozens of competing banks in Rwanda to choose from, you could think that today’s mortgage market is very confusing in Rwanda. It really is not though if you know the basic facts about financing a property purchase in Rwanda.

The following questions and answers should assist you, if you are interested in buying property in Rwanda or taking a mortgage from a local bank.

How much are mortgages?

In general it depends on your monthly income and the cost of your new real estate property in Rwanda. Banks and financial institutions in Rwanda use certain guidelines to determine the mortgage amount that they will lend to most homebuyers. The main guidelines used are housing expenses and long term debt for the property.

Local banks generally say that housing expenses (including mortgage payments, property insurance, income taxes and special assessments) should not exceed 24 % to 32% of your monthly income.

Types of Mortgage Loans in Rwanda

Although you may see many different types of mortgages advertised, they all belong to just two types of mortgages: those that carry a fixed interest rate, and mortgages that change interest rates during the course of the mortgage-loan on a periodic schedule mutually agreed by you and your bank.

Fixed interest rate mortgage: The major advantage of a fixed interest rate mortgage is that you know exactly your housing cost for the lifetime of the mortgage loan.

Adjustable Rate Mortgages (ARMs): These have become one of the most popular and effective tools for helping some prospective homebuyers in Rwanda to achieve their dream of homeownership. ARMs can be an excellent choice of financing under certain conditions, such as rising income expectations, high interest rates, and short-term homeownership. But one needs to have a steady income to keep up with all possible rates or payment changes.

How to shop most effectively for a mortgage

1. Talk with your real estate agent or broker in Rwanda as real-estate professionals in are normally in the best position to know about property financing opportunities in Rwanda’s marketplace.
 
2. Look for rate surveys published by local newspapers in Rwanda. Many newspapers now include brief tables on interest rates and mortgage availability in the real-estate or business section. They can help guide you to sources you have not thought about.

3. Look in the Rwanda Yellow Pages under "Mortgages,” and inquire for quotes by telephone. Call five to 10 different banks in Rwanda for rates and terms on fixed and adjustable loans.

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