Kariuki Maina
By Kariuki Maina 6 Min Read
If you are like the majority of people, you would concur that buying a property in Kenya nowadays is one of the most difficult tasks. To do that is expensive and annoying.Land prices are always growing, as are the costs of building supplies and many other things.Now consider a strategy that will enable you to buy your ideal home regardless of your financial situation. The use of a mortgage is here!TOP 10 MORTGAGE PROVIDERS IN KENYA TO CONSIDER WHEN BUYING A PROPERTY.This is a guide for:

  1. mortgage definition
  2. What is required to obtain a mortgage
  3. Where to get affordable mortgages
  4. Leading mortgage lenders in Kenya


What is a mortgage?

A loan is a mortgage. It is a loan provided to homebuyers by banks and other financial entities. The property serves as loan collateral. Most banks demand a down payment of 20% of the property’s worth as a starting point.


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One benefit of getting a mortgage is that every time you pay it off, you gain ownership of a little portion of the property. Contrarily, paying rent is a different story.


When a home is mortgaged, ownership is divided into two categories: equity, which is what you own, and debt, which is what the bank owns. As a result, each time you make a mortgage payment, you increase your equity and, at the conclusion of the amortization period, you own the home.


Having the ability to triple the value of the house after purchase is another benefit of getting a mortgage. Let’s imagine you decide to purchase a home with a 4,000,000 Kenyan Shilling mortgage.


Let’s say you come across someone who is eager to buy the property and is prepared to offer you 7,000,000 Ksh. You would have made a nice profit of 3,000,000ksh if you decided to sell the property for that sum. The amount you owe the bank must be paid in full; there is no need to pay interest.


Sound good?


Types of mortgages in Kenya

In Kenya, there are two distinct forms of mortgages. The loan’s interest rate is the basis for this categorization.


You have two options for the loan you obtain against your home:


a) Floating rate mortgage

This kind of homeowner’s loan, often known as a variable or adjustable-rate mortgage, takes changing credit market rates into account. This implies that depending on the market, the mortgage rate may increase or decrease.


The mortgage payback rate will be high while credit market rates are high, and vice versa.


Variable rates are frequently less expensive than fixed rates, although being riskier.


b) Fixed-rate mortgage

The fixed rate does not change with the credit market, as the name implies. The interest rate on this kind of mortgage is fixed and remains that way for the duration of the loan.


Although fixed rate mortgages are thought to be the safest option, they are sometimes more expensive than variable rate mortgages. In addition, if interest rates are decreasing, you run the danger of locking yourself into a higher rate.


Types of loans you might be offered

Financial organizations make every effort to customize the mortgage for various customers in order to attract a large number of borrowers.


The likelihood of the following loans being offered by most banks and other financial institutions is:


Owner-occupied residential mortgage. This is for folks who intend to reside in the home that they borrow money to buy.

Investment residential mortgage. This applies to those who buy a home as an investment rather than their permanent abode.

Construction loan for those seeking to construct new buildings. The money is frequently transferred to the contractor, who is the expert in charge of the project.

To up loans also called Equity loan. This is a simpler method of obtaining additional dollars utilizing the equity you have built up. One may utilize the loan for other reasons.

What you need to get a mortgage

This is what you will need to begin building your dream homes now that you are knowledgeable about mortgages.You will require the following papers to obtain a mortgage from the majority of banks and other financial organizations. Be aware, nevertheless, that the precise papers needed might differ from one institution to the next. To be certain, confirm with the lender of your choice.You’ll need this mortgage check list.

  • a completed mortgage application
  • original copies of your passport or other form of identification
  • a letter of introduction from your employer (for those employed)
  • three-month paystub
  • at least six months’ worth of certified bank statements
  • A sales contract or a letter of offer (when looking to purchase)


Top mortgage providers in Kenya

The top mortgage lenders in Kenya are listed here, along with the average yearly interest rate they charge.

When searching to purchase your dream house, you might want to check them out.

  1. Housing finance group
  2. CFC Stanbic bank Kenya
  3. KCB Bank
  4. Barclays Bank of Kenya
  5. Co-operative Bank
  6. Consolidated bank
  7. Standard chartered bank
  8. Citibank Kenya
  9. Commercial Bank of Kenya
  10. NIC Bank Kenya

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By Kariuki Maina Kariuki Maina
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5 months ago

[…] to the fact that mortgage rates have been at a 10-year low for some time, the home loan industry has received significant attention […]

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