Mortgage Loans in Kenya, Requirements And What To Consider Before Applying

Almost everyone dreams of owning a property in the future. However, this is not a cheap affair. One needs to have a substantial amount of money and this is where a mortgage may help. A mortgage is a loan which uses your property or real estate as collateral. You enter into an agreement with the bank and promise to repay the loan within a specified time period. The loans have an interest rates.

Research on the bank before thinking of entering into any agreement with them. Some banks have very high interest rates. Before applying for a mortgage, read the terms and conditions and check interest rates. Most banks require a down payment of 20% of the property value. It is also crucial to analyze the size of the property and its prize. Check whether your income is steady enough or if it may stop at a certain point. Remember while banks are awesome and friendly when applying for a loan, they aren’t quite the same when a loan is overdue. A simple miscalculation may end up costing your hard earned money.

There are two types of mortgage in Kenya:
1) Fixed – your interest rate (and monthly payment) stay the same throughout the agreed
time making it easier for financial budgeting.

2) Adjustable – changes in the credit market are reflected in repayment. This means the
interest rate can change periodically throughout the life of a loan.

The following are the things/ documents an individual needs to take a mortgage. These
documents may vary depending on the financial institution:

 Certified bank statements for six months to a year
 21 years and above

 Letter from the employer
 Legal identification card, passports and KRA pin certificate
 A signed mortgage application form
 Pay slips for the last 3 months
 Certified copies of partnership deed (for partners) and rental schedules for landlords
 Draft sale agreement or offer letters when looking to purchase
The following are some banks in Kenya that offer affordable mortgages;

Housing Finance Group
Began in 1965 and has catered to a lot of customers since then. They offer up to 90% of the selling price of value. Maximum loan term of up to 20 years for employed individuals and 10 years for self employed and groups. The product is for the outright purchase of a house.
Fees and rates include:
 Stamp duty of 4%
 Valuation fee of approximately 0.5%
 Legal fees of approximately 1-2%
 Commitment fee of 1.5%
There is a mortgage protection cover in case of death or disability. It also includes insurance cover for fire.

Standard Chattered Bank Kenya
They offer one of the most affordable interest rates in the country. The bank allows for loans of up to 100 million Kenyan Shillings and it is available to foreigners as well as Kenyans living abroad. One gets to enjoy affordability with a loan tenor of up to 25 years. They offer construction and home mortgages. Facility arrangement fee is 1% of the full loan amount(lowest is 10k). The interest rates can be as low as 12.2% with an option for the comprehensive 105% mortgage financing solution. Other fees one may incur include:
o Mortgage protection insurance – it protects the borrower during the mortgage term.
o Legal costs – based on the applicable legal fee scale.
o Stamp duty – subject to the prevailing land laws in Kenya.
o Valuation fees – paid after loan approval and is subject to the applicable valuer fee scale
per law.
Standard chartered also offers home loan extensions through re-advance or additional bond.
A re-advance lets you borrow a full amount or a portion of your original home loan, or access funds you’ve registered for future use.
With an additional bond, you register a new bond to access the needed funds.

Commercial Bank of Africa
With decades of experience in mortgage lending, CBA can offer some of the best advice
complemented by individually tailored mortgage solutions. They have interest rate for as low as 12.9% with up to 25 years payment period. There is no penalty for early repayment and they have experienced staff to advice and guide on property evaluations and market trends. Some other interesting features include;
o Interest is charged on a reducing balance basis
o Available to both Kenyan residents and non-Kenyan permanent residents
o A minimum of Ksh 1 million and a maximum amount of what you are able to repay.
o They arrange for valuations and legal processes by bank appointed service providers

Kenya Commercial Bank
KCB offers competitive interest rates at 13.3%. Mortgage can be repaid up to 25 years and they can also help you purchase and develop commercial properties. They also have a mortgage plus product where customers can apply for a top up of their loan. Other costs include;
o Negotiation fee of 2.5% of loan amount
o Legal and valuation fees
o Stamp duty at 4% of cost of property or value on the open market
o Stamp duty on charge of 0.1% of loan amount.
o Insurance premium can be financed by KCB
o Ledger fee of kes 350 per month

NIC Bank
NIC mortgage offers competitive interest rates at 13.4% with a variety of options:
 Equity release – financing against your already existing house
 Purchase financing – loan that funds to buy a ready-made house
 Top-up – increase in value of your existing mortgage due to reduction of loan amount or
appreciation of property value
 Balance transfer/re-finance – transfer of an existing mortgage from one financer to
another
 Plot purchase – financing to buy vacant land
 Minimum of KES 1 million and a maximum of what you are able to repay
 Interest is charged on a reducing balance basis
 No penalty for early repayment

 Mortgage Protection Insurance (MPI) cover that takes care of retrenchment, death,
disability and social perils
 Up to 90% financing for Kenyan residents and 70% for Kenyans in diaspora
They also offer payment period of up to 20 years and arrange for valuation and legal process by bank-appointed service providers. The loans are available to both Kenyan and non Kenyan permanent residents. Joint application is allowed.

CFC Stanbik Bank
Offers mortgage rates of 14.1%. The bank offers you 105% financing
 Up to 105% finance for purchase of a single dwelling residential properties below 20
million Kenyan Shillings.
 Up to 100% finance for construction of single residential house below 20 million Kenyan
shillings.
 Maximum loan tenure of up to 20 years
 Minimum loan amount of 1 million
 Minimum property value if 3 million
 Salaried individual with a minimum gross income of 100, 000 Kenyan Shillings. Free
cover limit of 30 million and below 90% financing
 At least 1 million loan amount
 Available to both local and diaspora customers
 Up to 20 years payment period

 Available to both salaried and self employed individuals.
They also have a dedicated call center to help you through the home loan application process.
Loan approval takes only 4 days. Through the bank's access mortgage feature, one can make lump sum deposits and withdrawals from their loan account at no costs once the loan is converted into a mortgage.

Barclays Bank Kenya
They have interest rates of 14.4% with up to 25 years loan repayment period. The loan
application process can be very fast through their website. It may only take 48 hours to get a response to your loan application. Not forgetting their wonderful customer service that will give you advice on loans, such as, monthly payments and interest rates.

Diamond Trust Bank
The package is available to both employed and self-employed individuals with a payment
period of 20 years at an interest of 14.6%. Other features are:
 Minimum amount of 1 million and a maximum of 40 million
 Security collateral on property
 Appraisal fee of 2% and 1% on the anniversary
 Available to properties located in cities and major municipalities.
They may give a loan for the following purpose:
 Purchase of new or existing residential properties
 Renovations, repairs or extension of existing unencumbered properties
 The takeover of existing housing loans from other financial institutions
The requirements:

 Valuation report from an authorized valuer
 Letter of the offer between buyer and seller
 Copy of duly executed sale agreement, signed date and stamp
 Certified copy of title deed
Co-operative Bank
Their interest rate is 14.9% offered in KES, USD, EURO and GBP.
Feature requirements are:
 Buy a plot if land
 Joint mortgage
 Build residential or commercial properties
 Mortgage take over from other financial institutions
 Equity release

Consolidated Bank
The bank offers interest rate of 15.1% and provides finance for residential properties, both
ready built and for construction, equity release, property purchase and project finance. They also have a quick approval process.