How to Apply for a Mortgage in Kenya

This post will take you through the process of applying for a mortgage in Kenya so that you can achieve your housing dream. This follows our previous article that introduced Mortgages in Kenya and dived into the nitty-gritty of this type of loan.

Let’s dive in!

Criteria for Selecting a Mortgage

Before you apply for a mortgage, important considerations must be evaluated to make sure that the mortgage loan you seek will be beneficial to you. Below are the general criteria endorsed by real estate experts:

1. Location – As you settle on your location of choice, you will need to make sure that the location is either growing or suits your needs as an investor, owner or occupier.
2. The number of bedrooms/sizes of real estate – Assess what the unit you want to buy is offering and compare the factors against your needs.
3. Finishing and Design – Design is steadily creeping in as one of the factors many investors look at before buying real estate. This will directly affect the mortgage amount you need.
4. External environment survey – Houses or buildings situated in areas with social amenities and resources tend to be priced higher than other properties. Making this keen assessment will enable you to identify the right mortgage package for you.
5. Miscellaneous cost, service, management and maintenance fees – This will sum up your total money spent on the real estate.

Application Process of a Mortgage in Kenya

The appraisal process is in 4 phases as described below:

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1. The client identifies the location of the property they want to purchase.
2. The client approaches the bank to do the preliminary assessment – Here, they are assessed to determine whether they qualify to purchase the property they want. The bank will check the location, pricing and credit scores, among several other details.
3. The bank will then give the client a letter of intent that documents what the funding institution requires from the client. Requirements may include:
   • Title Deed
   • KRA Pin
   • ID copies
   • Spouse information
   • Other KYC documents
4. Details are subjected to legal analysis by lawyers and land registry officers. Upon approval, Mortgage funds are disbursed to your account.

*Since the COVID-19 pandemic, most lending facilities digitized their application platforms making it easier for you to apply for a mortgage loan.

Where can you get a Mortgage in Kenya?

Interest rates listed above can vary due to many factors. Here are a few:

Factors that can affect interest rates of Mortgages

• The Central Bank of Kenya (CBK) base rate – The CBK base rate is the interest rate that commercial banks charge each other for loans. When the CBK base rate goes up, interest rates for mortgages go up.
• The state of the economy – When the economy is doing well, interest rates tend to be lower. This is because there is more money available to lend, and lenders are more willing to lend at lower rates. The converse is true.
• Credit score – Borrowers with good credit scores typically qualify for lower interest rates than borrowers with bad credit scores as they are considered to be a lower risk to lenders.
• Loan amount – The amount of the loan can also affect the interest rate. Larger loans typically have higher interest rates than smaller loans.
• Size of down payment – The larger the down payment, the better the interest rates set by banks or other funding facilities.
• Repayment period – The repayment period can also affect the interest rate. In general, longer repayment periods may have higher interest rates compared to shorter repayment periods.