Mortgage Financing Lifts Young Kenyans Into Home Ownership League
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Cheaper long-term mortgage financing, supported by the Kenya Mortgage Refinancing Company, is opening home ownership to younger Kenyans, according to Co-operative Bank's mortgage specialists.
Spreading payments over a longer period reduces the amount of the monthly instalment, according to Mr Evan Mwangi, a mortgage specialist and real estate expert at Co-operative Bank, who says even a young person earning through content production can now apply for a mortgage. The information emerged from the Co-op Bank Youth Forum, through which the bank provides financial insights to young people.
The Kenya Mortgage Refinancing Company (KMRC), formed eight years ago to ease mortgage financing for individuals, has over the years provided financial institutions, SACCOs and approved microfinance firms with affordable loans to on-lend to their customers.
Through Co-operative Bank, the funds can be used for buying ready houses, constructing homes on owned land, or buying land to build on. Mortgage limits go up to Ksh10.5 million depending on location and terms, although Mr Mwangi points out that borrowers need not draw the maximum if they require less.
When building a house, the bank loan is disbursed in phases, starting with the foundation — for which a borrower receives about 20% of the loan amount — before moving to the superstructure, roofing and eventual finishing. A six-month moratorium offers relief to borrowers during the build.
For those in business, Mr Mwangi says borrowers need to keep good records to support a loan application, with Co-operative Bank reviewing the CRB report and net income after deductions. He noted that a borrower cannot hold more than one KMRC loan, describing the facility as "one person one house", and that the title of the land being built on serves as security for the mortgage.