When Buying a Home in Kenya, here are the Top 10 Mortgage Companies to Think About.
If you're like most people, you'll agree that owning a house or home in Kenya today is one of the most impressive things you can do. It costs money and is annoying to do that.
The price of land keeps going up, the price of building supplies is through the roof, and so much more.
Now, think of a way that you could buy your dream house no matter how much money you have. A mortgage can help with that.
This is a manual about:
- What it means to mortgage
- How you can get a mortgage
- How to get a cheap home loan
The best places in Kenya to get a mortgage
What is a home loan?
A home loan is a mortgage. It is a loan that banks and other financial institutions give to people who want to buy a home. For the loan, the property is used as security. Most banks will need a down payment of 20% of the property's value to get things going.
One benefit of getting a mortgage is that every time you pay it off, you own a little more of the property. On the other hand, this is not true when it comes to paying rent. the first court
When you get a mortgage on a property, the ownership is split into two parts: the equity, which you own, and the debt, which the bank owns. So, when you make a mortgage payment, you buy more equity, and by the end of the amortization period, you own the property.
The value of the property can go up after you buy it, which is another benefit of getting a mortgage. Say, for example, that you buy a house with a loan of 4,000,000 ksh.
Let's say you find someone who wants to buy the property and is willing to give you 7,000,000 Ksh. If you sold the property for that price, you'd have a nice 3,000,000ksh in your pocket. You only have to give the bank what you owe them; you don't have to give them any of the money you made.
Nice, right?
How mortgages work in Kenya
In Kenya, there are two kinds of mortgages. This grouping is based on how much interest was paid on the loan.
The loan you get for your home can be a:
a) Mortgage with a variable rate
This home loan takes into account changes in the credit market rates. It is also called a variable-rate mortgage or an adjustable-rate mortgage. This means that the mortgage rate will change depending on how the market is doing.
When interest rates on the credit market are high, so will be the interest rate on a mortgage, and vice versa.
Even though they are risky, variable rates tend to be cheaper than fixed rates.
b) Mortgage with a fixed rate
The fixed rate doesn't change with the credit market, as the name suggests. This kind of mortgage has an interest rate that stays the same for the whole loan period.
Fixed-rate mortgages are thought to be the safest, but they usually cost more than variable-rate mortgages. You also run the risk of getting stuck with a higher rate if interest rates are going down.
Loans you might be able to get
In order to get a lot of people to borrow money, banks try to make mortgages as unique as possible for each client.
The following loans are likely to be available from most banks and other financial institutions:
Mortgages for homes owned by the borrower. This is for people who plan to live in the house they buy with a mortgage.
Investment residential mortgage. This is for people who buy the house as an investment and not as their main home.
People who want to build from scratch can get a construction loan. Usually, the money is sent to the contractor, who is in charge of the project.
To-up loans are also known as Equity loans. This is an easier way to use the equity you've built up to get extra cash. There are other ways to use the loan.
How to get a mortgage and where to find mortgage companies in Kenya
So, now that you know everything about mortgages, here's what you'll need to start building your dream home.
You will need the following papers to get a mortgage from most banks and other financial institutions. But keep in mind that the exact documents needed may be different from one institution to the next. Just to be sure, check with the lender you like.
Here is a list of things you need to do to get a mortgage.
- A signed form for getting a mortgage
- Original copies of your ID, passport, or other form of identification
- A letter of introduction from your boss (for those employed)
- 3 months' payslip
- At least 6 months of bank statements that have been certified
- Offer letter or sales contract (when looking to purchase)
Top mortgage providers in Kenya
Here are some of the best mortgage companies in Kenya and the average annual interest rate they charge.
If you want to buy your dream home, you might want to check them out.
- Housing finance group
- Standard chartered bank 12.2%
- Citibank Kenya 12.5%
- Commercial Bank of Kenya 12.9%
- KCB Bank 13.3%
- NIC Bank Kenya 13.4%
- CFC Stanbic bank Kenya 14.1%
- Barclays Bank of Kenya 14.4%
- Co-operative Bank 14.9%
- Consolidated bank 15.1%
Disclaimer: the figures are just an estimate and may vary with time.
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Clinton Otieno
Director,
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- Clinton T. Otieno
- Utawala,Nairobi. KE
- archistrutechsltd@gmail.com
- +254-798-226-663
