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September 1, 2022

Mortgages in Kenya

Buying a home is a major milestone in life. But, it’s also a big financial decision. While it might seem like there are many steps involved with getting a mortgage, your journey can be made easier and more seamless if you know what to expect and how to prepare for the process.

How To Finance Your New Home

When purchasing a home, you will need to consider how you are going to finance the purchase.

There are many types of mortgages that can be used to finance your new home. Mortgages vary by the type of loan, the length of the loan, and whether or not there is a down payment.

Fixed-rate mortgage: A fixed-rate mortgage means that your interest rate and monthly payments will remain constant for the life of the loan. These loans typically require higher down payments than other types of mortgages because they offer more security to lenders.

An adjustable-rate mortgage (ARM): is an adjustable-rate mortgage with an interest rate that may change periodically according to changes in an index. This type of loan is best for those who want to take advantage of lower rates now but also plan on selling their house in a few years when rates increase.

Mortgage Relief Kenya

There are a lot of great reasons why you should apply for a mortgage in Kenya. If you’re considering buying your first home, there may be opportunities to get relief on your tax burden. Here’s what you need to know about mortgage relief in Kenya:

  • Relief is available only when the property is used as a primary residence.
  • You can get relief when buying or refinancing a primary residence at the time of purchase and at re-mortgage.

There are different types of relief:

  • Mortgage Interest Relief (MIR)
  • Taxable Rental Income Relief (TRIR)
  • Repayment Relief Scheme (RRS)
  • Rural Housing Tax Credit Scheme (RHTCS)

Mortgage Process Kenya

The mortgage process in Kenya is tedious and can take up to 3 months to complete. Depending on your situation, the following steps might be required:

  1. Application: You will need to apply for a mortgage with a bank or financial institution. There are various types of mortgages available in Kenya, so it is important to know which one best suits your needs and expectations.
  2. Eligibility: Your bank will assess the feasibility of your application and whether you meet the requirements.
  3. Approval: If eligible, you will then receive an approval from your lender with detailed information on how much you can borrow and what condition you need to fulfill.
  4. Loan Agreement: Once this is done, the final step would be signing a loan agreement between you and the lender containing all conditions agreed upon previously. This is when the mortgage process officially begins!

How Mortgage Works In Kenya

A mortgage is a loan that gives you the funds to purchase a home. It’s an important step in buying property because it helps to protect your investment while allowing you to enjoy the benefits of homeownership. A mortgage is secured by the value of the home, which means that if you default on payments, you risk losing your property.

Kenya’s mortgage market has changed over time and mortgages are now more accessible than they were before. Developers are able to build on land with more flexible financing options, which means people who would ordinarily not be approved for a mortgage due to their debt-to-income ratio can still get funding for their new property. This flexibility makes mortgages more obtainable, so having one isn’t just for people with perfect credit scores anymore.

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