How to compare mortgage offers in Kenya

How to compare mortgage offers in Kenya

When shopping for a mortgage in Kenya, look beyond the headline interest rate. Consider total cost of borrowing, flexibility, hidden fees, and customer support. Use mortgage calculators to estimate EMI and amortisation.

What to compare before choosing

• Interest rate: Is it fixed, variable, or tiered? What’s the base and how often is it reviewed?

• Loan-to-value (LTV): What percentage of the property value is the lender willing to finance?

• Fees and costs: Includes legal, valuation, processing, insurance, and commitment fees—often totaling 4–6% of the loan.

• Prepayment and restructuring terms: Can you pay early or change terms later without penalty?

• Turnaround time: How long does approval, disbursement, and registration take?

Compare offerings on platforms like Cytonn, KMRC, and your SACCO portal. Always request a loan amortisation schedule and read the fine print before signing. Check if insurance (fire, life) is bundled or optional.

Tips for getting a better mortgage deal

Improve your CRB score, maintain job/income stability, and save for a bigger deposit. Apply jointly with a spouse or guarantor if needed. Consider negotiating for rate discounts, especially if you’re employed in a bank’s preferred sector (e.g., healthcare, education, civil service).

Understanding mortgage types in Kenya

Understanding mortgage types in Kenya

In Kenya, mortgage products are offered by commercial banks, SACCOs (Savings and Credit Cooperative Organizations), microfinance institutions, and the Kenya Mortgage Refinance Company (KMRC). Mortgages can be used to buy homes, build, purchase plots with title deeds, or renovate property. Loan terms and rates vary widely depending on the lender and borrower profile.

Common types of home loans in Kenya

• Fixed-rate mortgage: The interest rate stays the same for a defined period, often 1–10 years. Predictable but usually higher at first.

• Variable-rate mortgage: Interest adjusts based on Central Bank Rate (CBR). Starts lower but can increase.

• Islamic home finance: Sharia-compliant options like diminishing Musharakah, where no interest is charged, just profit-sharing.

• SACCO home loans: Offered to members. Flexible terms, often lower rates, but limited to SACCO’s capacity and savings multiplier.

• KMRC-supported mortgages: Long-term fixed-rate loans (up to 20 years) for low-to-middle income earners. Offered through partner banks.

Most lenders offer mortgage terms between 5 and 25 years. Banks usually finance up to 90% for salaried individuals and 70% for the self-employed. SACCOs may cap loans at 3–5x one’s deposits. Some schemes target diaspora Kenyans and first-time homeowners.

Who qualifies for a mortgage in Kenya?

Kenyan citizens, permanent residents, and diaspora with documented income can apply. Lenders assess age, job stability, credit history, and repayment ability. Required documents include ID/passport, KRA PIN, payslips or bank statements, CRB report, and property sale agreement or title.