Mortgage Process In Kenya

What Is The Mortgage Process In Kenya?

Getting a mortgage in Kenya involves a tedious process that can take up to three months to complete. The first step is to apply for a mortgage with a bank or financial institution.

The lender will consider different factors such as income, age, stability, assets, and credit history to decide how much to offer you.

It is important to be truthful and provide all the necessary documentation to avoid inconsistencies that may lead to the rejection of your application.

After the lender reviews your application, they will perform their due diligence by assessing your income, debt, and creditworthiness to determine how much they can loan you.

The next step is to get an appraisal to determine how much mortgage loan you qualify for. Once you know how much you qualify for, you can start searching for a house to buy.

It is important to note that there are various types of mortgages available in Kenya, such as floating rate mortgages and fixed-rate mortgages.

The mortgage rate for a floating rate mortgage fluctuates depending on the market, while the mortgage rate for a fixed-rate mortgage remains constant throughout the loan period.

To finance your new home, it is best to use a mortgage as it helps to protect your investment while allowing you to enjoy the benefits of homeownership.

There are many benefits to applying for a mortgage in Kenya, such as mortgage interest relief, which can help reduce your tax burden.

It is also advisable to consider getting your mortgage through the government-backed Kenya Mortgage Refinancing Company (KMRC).

What Are The Minimum Requirements For Getting A Mortgage In Kenya?

To obtain a mortgage in Kenya, there are several minimum requirements that must be met.

These requirements include evidence of income, proof that you can put forward the 10% financing needed to obtain the loan, and proof that you can cover costs such as lawyer fees, valuation reports, and stamp duty.

Other requirements include a KRA PIN certificate, three passport size photographs, a sale agreement duly signed by both parties and witnessed by a lawyer, and the title to the property being purchased/charged (minimum lease term must be at least 35 years).

Additionally, you must open a mortgage account with an opening balance of Kshs.10,000. For salaried persons, self-employed, contract persons, and Kenyans working abroad, home loans are available at all KCB Bank branches countrywide.

To apply for a mortgage, you will need to bring original and copies of minimum requirements, including certified bank statements for six months to a year, a letter from the employer, legal identification card, passports, and KRA PIN certificate, a signed mortgage application form, and pay slips for the last three months.

Different banks offer different interest rates and loan tenors.

For example, Standard Chartered Bank Kenya offers one of the most affordable interest rates in the country, with loans of up to 100 million Kenyan Shillings available to foreigners as well as Kenyans living abroad.

KCB Bank offers competitive interest rates at 13.3% and mortgages can be topped up with mortgage plus.

Commercial Bank of Africa offers interest rates as low as 12.9% with up to 25 years payment period and no penalty for early repayment.

How Long Does It Take To Complete The Mortgage Process In Kenya?

The mortgage process in Kenya can take up to three months to complete. The process involves several stages, which may vary from one lender to another.

The first step is to apply for a mortgage with a bank or financial institution. The lender will assess your loan application and advise you on the decision within 48 hours of receiving complete documentation.

The amount you can borrow will be based on the selling price or current open market value, whichever is lower.

The mortgage agreement will have a repayment schedule from 5 up to 30 years, and the interest rate will be fixed for the duration of the loan.

To obtain a mortgage in Kenya, you will need to provide evidence of income, proof that you can put forward the 10% financing needed to obtain the loan, and proof that you can cover costs such as lawyer fees, valuation reports, and stamp duty.

The mortgage agreement may include a prepayment penalty, which would apply if the mortgage is paid off within the first few years. The penalty is in place because banks make most of their interest in the early years of a mortgage.

In summary, the mortgage process in Kenya can take up to three months to complete, and the amount you can borrow will be based on the selling price or current open market value, whichever is lower.

The mortgage agreement will have a repayment schedule from 5 up to 30 years, and the interest rate will be fixed for the duration of the loan.

To obtain a mortgage, you will need to provide evidence of income, proof of financing, and proof of ability to cover costs.

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