Recently, President Uhuru Kenyatta launched Kenya Mortgage Refinance Company,KMRC,an initiative of the National Treasury and World Bank to boost the Affordable Housing Pillar of the Big 4 agenda. This will be by providing cheaper, secure,long-term funding to mortgage lenders thereby increasing the availability and affordability of mortgage loans to Kenyans. A mortgage is where one uses their property as collateral for borrowing money from a lender(bank,microfinance banks or sacco). The title to the property remains in the hands of the lender until such a time as the entire loan has been repaid with due interest. Its a prerequisite that before engaging in mortgage loans a borrower needs to do extensive research on the loan,the bank and the property. Does it have your interests at heart? What is the history with former clients? How open is the company in regards to fees/interests and terms of payment? Which is the most suitable form of mortgage to engage in? What are the terms of agreement?
Here are some of the best banks with affordable mortgage rates and terms.
Standard chartered bank
Is renown for highly competitive mortgage rates in Kenya. Their products include:
• Equity release– where one uses his/her existing property as collateral for a higher loan
• Top up – Access a loan based on the amount you have settled after 2years.
• Balance transfer- one is able to combine all his/her mortgage facilities into one account.
• Construction Mortgage– finances land owners to build homes.
Documents required include
Completed and signed application form
Certified copies of pay slips of the last 3 months
Certified letter from employer stating terms of employment.
Documentary evidence of any other income
Certified copies of bank statements for the past 12 months (for non-Standard Chartered customers)
3 colour passport-sized photos (for non-Standard Chartered customers)
Copy of title deed among others.
In case of mortgage transfer a mortgage statement for the last 6 months is necessary.
Requirements vary for Kenyans residing out of the country.
There are additional benefits to obtainance of home loans from this bank. This include:- a current account, a pre approved debit card,KES and USD mortgage facilities, high loan amounts of upto 100million to home buyers,affordable repayments due to longer loan periods,wide range legibility and faster loan processing.
Fees and charges.
Facility arrangement fee: 1% of loan amount (Minimum KSH 10,000)
Legal costs and stamp duty – varies depending on property value and location
Property insurance – comprehensive insurance with the Bank’s interest duly noted.
Mortgage protection insurance for the borrower – to safeguard the borrower during the mortgage term.
Valuation fees – upon approval of application, the property should be valued.
Kenya commercial bank
Is yet another bank which offers mortgage loans at competitive interest rates so that that home is just a reach out ahead. Other benefits include equity release for school fees,medical emergencies or renovations and flexible repayment terms.
To qualify for this loan, one is required to hold a mortgage facility with KCB as well as show proof of income.
Fees and charges
Negotiation fee-2.5% of loan amount
Valuation,leger(Ksh 350 per month)and legal fees.
Stamp duty (4% of property cost or open market value)
Housing finance bank
For over 52 years Housing Finance has been servicing Kenyans with mortgage loans. The following are the loan types offered with interest rates.
Owner Occupied Residential– the borrower will be lent up to 95% if the property to be purchased is intended to be the primary home.
Construction residential Loan-This is a loan to finance the construction of a residential property offered upto 90%. The terms are that the project will have to be managed by an agreed group of professionals and disbursement will be on an arrears basis to the building contractor.
Investment Residential_ loan taken up for property investment rather than residence by the borrower. Financed upto 85% by lender.
Residential Plot purchase- finance property development intended to use as borrower’s residence. Financed upto 70% of property value. These loans must be fully repaid within 5 years.
Also offered is equity release and top up loans of upto 90% property value .
Cooperative bank of Kenya
Finances renovation or construction of residential or commercial properties. Single dwelling units have a repayment period of upto 20 years whereas for commercial residences it is 10 years.
• Competitive interest rates
• A moratorium of six months is provided
• Affordable instalments with a repayment period of up to 20 years
The house you purchase can be used as collateral and its rental income can be used to repay the loan.
You can always get your dream home with a Barclays mortgage loan. The entire process is simplified and open. Assistance and prompt communication on state of your application is also guaranteed all the way. Shariah compliant mortgages are available. Loans offered are:- equity release,owner residential,construction, buy- to- let and remortgage finance options.
One can purchase property anywhere within the country even upcountry and different rates are available for each.
The repayment period extends up to 25 years.
Fees and charges
• Security charge over property
• Maximum loan finance of 90%
• Costs Percentage of mortgage amount (approximate)
• Transfer stamp duty 4% of home value / 2% for upcountry
• Stamp duty on charge( 0.1%)
• Negotiation fees (1% – 2%)
• Legal fees (1.2%)
• Fire insurance (0.125%)
• Home loan protection cover( 0.3%)
• Valuation fees( 0.25%)
Insurance and protection costs are annual. If you already own the plot one can get up to 100%of construction costs. However,for buying and building you get up to 80% with a maximum 20 year payback period.
Construction loans are disbursed in four phases, 25% of the loan at a time, depending on architect’s certificate and relationship manager report.
Building plans must be approved and Bill of Quantities (BQs) must be drawn by independent, qualified Quantity Surveyor.
Stage valuations are done throughout the construction process as well as both pre and post valuation fees are applicable.
There is a 9 month grace period during construction after which repayment starts.
There are also costs involved for onsite visits that are variable depending on the location of your property.
Insurance and protection costs are annual.
Buy-To-Let-Intended only for clients who wish to build a portfolio of property investments. Loaned up to 70% value of property. A maximum of 6 properties can be purchased. A 12month rental lease must be signed upon purchase though no moratorium is available.
Finance available for single family occupant houses only.