The Mountain Journal
Comfort Homes Director Hezekiah Kariuki Cautions Citizens against using their Matrimonial Houses as collateral. The financial advisor says it’s sad to see families being evicted by mainstream financial institutions after using the property they live in as security for huge debts.
“It’s critical to first weigh the risk and the ability to repay before engaging in a loan contract, and where collateral must be, it’s my advice to use another property which cannot affect family livelihood in case of the worst.” Kariuki Said.
The inflation in the Country is a reality, and many Financial institutions have huge loan books which are non-performing, leading to a series of recoveries, leaving debtors financially crippled.
Kariuki, also a director at Together as One Micro Finance, observed that after taking the loan, some people go into wrong business initiatives where the Capital is not secure; hence, the return on investment is not guaranteed.
” Tenders are good business investments, but nowadays have become a trap in many businesses, when a company takes huge credit to do supplies to the government, and then the payments are delayed for years, the trader becomes exposed to lenders’ recoveries,” he added.
When the loan is overdue, he said financial institutions are left with no or very minimal options apart from recovery, because in many cases the borrowed funds are owned by the shareholders, and losing it would mean collapse of the institutions.
He advocated for a strike of balance in enough consultations between the lender and borrower before a contract is entered into to avoid future legal battles.
He pointed out that enough financial training is one of the key interventions to save investors from auction menace.