Top 10 Best Mortgage Providers In Kenya To Consider When Buying A Property

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Mortgage Providers In Kenya To Consider When Buying A Property Guide

The cost of land is ever-rising; the price of construction materials is on the roof, and so much more.

Now, imagine a way that would make owning your dream house a reality regardless of your net worth. That is where a mortgage comes in!

This is a guide on:

  1. What mortgage means
  2. What you need to get a mortgage
  3. Where to get a cheap mortgage
  4. Top mortgages providers in Kenya

What is a mortgage?

A mortgage is a loan. It is a loan offered by banks and other financial institutions to homebuyers. The property is used as collateral for the loan. To get started, most banks will require a down payment of 20% of the value of the property.

An advantage of taking a mortgage is that you own a little piece of the property every time you pay off the mortgage. Conversantly, this is not the case with paying court

Taking a mortgage on a property strips the ownership into two: equity, which is what you own, and debt, which is what the bank owns. Therefore, when making a mortgage repayment, you buy more equity and end up owning the property by the end of the amortization period.

Another advantage of taking a mortgage is that you can trip the value of the property once you have bought it. Let say, for instance, you take a mortgage of 4,000,000 ksh and buy a property.

Say, you find a person who is interested in the property and is willing to pay you 9,000,000 Ksh. If you chose to sell the property at that amount, you will have made a cool 4,000,000ksh. You only require paying the bank what you owe them, and not a cent on the profit you made.

Types of mortgages in Kenya

There are two types of mortgages in Kenya. This classification is based on the rate paid on the loan.

The loan you take on your property can either be a:

a) Floating rate mortgage

Also called a variable or adjustable-rate mortgage, this type of homeowner’s loans factors in fluctuating credit market rates. What this means is that the mortgage rate will go up or down depending on the market.

When the rates in the credit market are high, the mortgage rate of the repayment will be high and vice versa.

Though risky, variable rates are often cheaper compared to fixed rates.

b) Fixed-rate mortgage

As the name suggests, the fixed rate does not fluctuate with the credit market. This type of mortgage has a fixed interest rate that runs through the entire term of the loan.

Fixed rate mortgage is considered the safest but are often more expensive compared to variable rate mortgages. In addition, you risk locking yourself in a higher rate in cases where the interest rates are falling.

Types of loans you might be offered

To entice a huge number of borrowers, financial institutions try as much as possible to tailor the mortgage for different clients.

Most banks and other financial institutions are likely to offer the following loans:

Owner-occupied residential mortgage. This is for those who wish to live in the property they purchase with the mortgage.
 Investment residential mortgage. This is for those that purchase the property as an investment and not as their primary residence.
Construction loan for those looking to build from the ground The amount is often sent to the contractor are the professionals overseeing the project.
To up loans also called Equity loan. This is an easier way of getting extra funds using the equity you have accrued. The loan can be used for other reasons.

What you need to get a mortgage

Therefore, now that you know all about mortgages, here is what you will need to get started with your dream homes.

For most banks and other financial institutions, you will need the following documents to get a mortgage. Note, however, that the exact documents required may vary from one institution to the other. Check with the lender you prefer just to be sure.

Here is a mortgage checklist you will need.

A signed mortgage application form
Original copies of your identification documents, ID or Passport
An introduction letter from your employer (for those employed)
3 months’ payslip
Certified bank statement for at least 6 months
Letter of offer or a sales agreement (when looking to purchase)

Top mortgage providers in Kenya

Here are some of the top mortgages providers in Kenya, and what they charge as the average annual interest rate.

You might want to check them out when looking to buy your dream home.

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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