10 Banks In Kenya That offers the Cheapest Mortgage Rates

Owning a home is a lifelong dream of every person.  People take pride in owning a home; it is considered a measure of success and a significant milestone in one's life. Unfortunately, due to the high cost of buying a home in Kenya, this remains an out of reach dream to many. According to the Kenya Bankers Association, the average home value in the country was 11 million in 2019. However, thanks to several cheap mortgage rates available in Kenya today, owning a home is now very possible.

A mortgage is a loan by which the real estate or the property is used as collateral. The lender (Bank) and the borrower (you) enter in to an agreement where you as the borrower will be given some amount of money to build the house and then pay back the loan at an accrued interest over a period of time. Before you apply for a mortgage in a particular bank, it's vital to carry out in-depth research on several banks and know their interest rates so you can choose the most competitive one.

Note that there are some major factors to consider when approaching a bank for any form of financing. First, you need to read their terms and conditions carefully as you pay attention to the property price, its location, monthly payment, and interest rates. It's also advisable to choose the Bank that has won your trust. Remember you can still buy a house with zero interest. We have done a thorough research on banks in Kenya, and come up with ten banks in Kenya that offers the lowest mortgage rates.

1.    Standard Chartered

Standard Chartered Bank was the first Bank to launch a mortgage offer of 10.9% p.a with an option of the comprehensive 105% mortgage financing solution. The buyer can take up to KES 100 million. Meaning you won't have to compromise on the house you need for your family. The Bank has a more extended loan tenor period of up to 25 years, making the monthly repayment more affordable. The construction mortgage is disbursed in stages, and you will only need to pay interest on the disbursed amount.

·        Requirements

v  Certified copies of last three pay slips

v  PIN certificate

v  Completed and signed application form

v  For the non-Standard Chartered customers, they need to provide 12 months certified copies of bank statement

v  Sale agreement

v  Copy of title deed

v  Approved architectural drawings and building plans

v  Certified letter from employer stating terms of employment

v  Regulatory approvals

v  Bills of Quantities

·        Charges

v  Facility arrangement fees: 1% of the loan amount (KES 10,000 minimum)

v  Stamp duty and legal costs: varies depending on the location and the value of the property

v  Borrower's insurance fee for mortgage protection: to protect the borrower during the mortgage term

v  Fire (property) insurance: comprehensive insurance with interest noted by the Bank

v  Valuation fees: upon application approval, the property will be valued.

2.    Barclays

Barclays Bank offers mortgages at an affordable rate from 11.5% and 6.5% for USD loans. Some other benefits include:

v  Monthly-reduced payments

v  48-hour response on a mortgage application

v  Waver on valuation and legal transfer fees

v  Discounted offer with home furnishing partners

v  Up to 50% cashback on ledger fees

v  Maximum loan finance of 90%

Fees and Rates

v  Valuation fees

v  0.25% of the value of the property

v  Home loan protection covers at 0.3%

v  Fire insurance at 0.125%

v  Legal fees 1.2%

v  Stamp duty charge at 0.1%

v  Negotiation fees of 1% to 2%

v  Transfer stamp duty of 4% of home value  and 2% for upcountry

v  Note that insurance and protection costs are on an annual basis

Required Documents

v  12 months statements for non-customers

v  Identification (Passport or ID)

v  Pin certificate

v  Marriage certificate for joint applicants

v  Letter from employer confirming terms of employment, basic salary and allowances indicating the variable and the fixed ones, anticipated retirement age, date of employment and length of the service, as well as the position held in the company.

3.    Commercial Bank of Africa

CBA has decades of experience in mortgage lending at the rates of 12.9%. They offer the best advice complemented by individually tailored mortgage solutions. They have experienced relationship managers who take their time to advice, guide borrowers, and advise them on the property market trends and property evaluations. They have flexible repayment periods of up to 25 years, and there is no penalty for early repayment.

CBA features

v  Interest is charged on a reducing balance

v  The legal and valuation process is arranged and done by one of the appointed bank service providers

v  Mortgages available to both Kenyan and non-Kenyan citizens

v  You can borrow in Kenyan shillings or in major currencies such as GBP, EURO, and USD (if the salary comes in foreign currency).

Requirements

v  A duly signed sale agreement

v  Bank statement for the last six months

v  Original ID/Passport including copies

v  A completed and a signed mortgage application form

4.     Consolidated Bank

This Bank has the most competitive interest rates of 13.5% with a tenor of up to 15 years, making it easy for you to secure your dream home. Their loan features include;

v  Quick approval process

v  Low-interest rates

v  Flexible repayment period

Consolidated bank mortgage loans provide finances to either buy an already built house, to construct, project finance, equity release, and to purchase a plot.

Requirements

v  Next of keens details

v  KRA pin

v  Identification Card or Passport

v  Copy of PIN certificate

v  Latest three months pay slips

v  Six months bank statements

5.    NIC Bank

NIC Bank has a dedicated mortgage specialist who makes your journey to owning your dream house easy and stress free. Their average mortgage rate is at 14%.

They have a variety of options including;

v  Construction finance-finances toward building your residence

v  Balance Refinance/transfer-loan to transfer an existing loan from another financial institution

v  Top-up loan- increase in existing mortgage value as a result of an appreciation of the value of the property or reduction of the amount of the loan

v  Plot purchase- financing to purchase a plot of land

v  Equity release- financing to an already existing house

v  Financing a purchase- loan to purchase an already made house

 Loan Benefits and Features

v  Kenyans residents are financed up to 90%, while Kenyans in the diaspora are offered 70%.

v  No penalty on early payment

v  Up to 20 years payment period

v  Their Mortgage Protection Insurance (MPI) cover takes care of disability, death, retrenchment and perils cover

v  Interest is charged on a reducing balance

v  A complete property can get up to 105% financing

v  They allow joint application

v  Mortgage available for both Kenyan and non-Kenyan residents

6.    National Bank

The national Bank offers its mortgage rates at 15.45% on reducing balance for business. They offer loans in a complete package with:

v  Economical interest rates

v  The flexible repayment term of up to 25 years

v  Flexible financing up to 90%

v  Long tenors to make repayment stress free

v  Guidance from dedicated mortgage specialists

v  An accelerated payment that enable borrower to pay loan sooner than the stipulated in construction loan agreement

v  Comprehensive homeowner's house, fire and life insurance cover

Costs and Rates

v  Interest rates 15.45% on reducing balances for business

v  Valuation fees on an average of 0.4% of property value and the legal fees based on advocates remuneration order

v  Insurance (fire and life) – 0.5% of mortgage cover

v  Debit income ratio – 65% of net disposable income

v  Stamp duty on transfer – 4%

v  Appraisal fee – 1.0% of the loan amount

Required documents

v  Copy of title

v  Land rates and rent receipts

v  Sale agreement

v  3-month payslip

v  Copy of KRA pin

v  Copy of ID/Passport

v  Letter from employer

7.    Kenya Commercial Bank (KCB)

KCB is the largest home financier in Kenya, according to the latest official data with Shs 4.3 billion outstanding loans as at the closing of 2018. Its average mortgage rates are 14.5%.

Towards the end of 2016, KCB had 6496 mortgage accounts. Some benefits of taking a mortgage with the Bank include flexible payments and competitive rates, access to all their banking products such as credit cards, overdrafts and investment accounts, Mortgage Protection Insurance (MPI) covering up to a limit of Kshs. 18 Million with no need for retrenchment cover, medical checkup, or social perils cover.

Requirements

v  Income proof

v  Fees and Rates

v  Valuation fees

v  Legal charges

v  Leger fee, which is 350 per month

v  Negotiation fee, which is 2.5% of the mortgage loan amount

v  Evidence that you can finance 10% of the required amount and other related costs such as Stamp duty, Valuation report, Lawyer report

8.    CFC Stanbic Bank

This Bank offers one of the best deals to the borrowers with a 105% mortgage financing solution with a rate of 14.5. This is to cater to 100% sale price and the other closing costs, such as stamp duty and legal fees, to facilitate the ownership process. Their package allows you to buy an existing developed residential property by giving you up to 105% financing.

Essential details you need to know about CFC Stanbic Bank includes;

v  Their maximum tenure goes up to 20 years

v  You must be a salaried individual with a gross salary of kshs 100,000

v  Free cover limit, loan amount of Kshs 30 Million and below

v  Embedded insurance in the loan repayments

v  The minimum loan limit is 1 million

v  Minimum value of the property should be a minimum of Kshs 3 Million. Once you have provided all the documents, the loan can be approved within four days.

9.    DTB

Diamond Trust Bank offers an effective and efficient process to clients in need of a mortgage loan. Their rate stands at 14.6%. They can complete the process within 48 hours if all the documents are in place. Their repayment plans are flexible to suit all their client's needs. BTB offers several mortgage options ranging from a joint mortgage, buying a plot of land, buying commercial or residential property, equity release, mortgage top-up, as well as mortgage buyout from other financial institutions

 Requirements

v  Valuation report

v  Certified title deed copy

v  12 months bank statements

v  Marriage certificate or an affidavit for a joint application

v  Evident of down payment

v  Employers letter stating employment terms

v  A valid copy of work permit

Charges

v  Valuation fees

v  Legal charges

v  Insurance fee

10.                       Co-operative Bank

The co-operative Bank is a reliable mortgage loan financers at an affordable rate of 14.9%. They offer their loan up to a maximum period of 10 years for residential, commercial units and 20 years for a single dwelling unit. They also provide you with a moratorium (grace period) of six months.

Co-operative Bank has several mortgage options such as;

v  Mortgage top-up

v  Joint mortgage

v  Capital to purchase a plot of land, commercial or residential property

v  Equity release

v  Mortgages take over from other financial institution

Requirements

v  For a loan above Kshs 5 million, you have to provide an audited account

v  Bank statement for the last six months

v  Business registration certificate

v  Necessary approvals by NEMA, local authorities and city councils and securities to be provided

v  Copy of the property title deed

v  A copy of your identity card or Kenyan Passport

v  Evident of down payment

Disclaimer

Banks usually adjust their mortgage rates from time to time as they consider fit. Before you decide to choose a certain financier, ensure you crosscheck with them. The percentage in this article is of how the property market is from the date of publish.

Verdict

In Kenya, numerous mortgage financiers are willing to help clients own their dream home. However, not all of them have affordable rates. Thus, make an effort to research thoroughly on the one with the most competitive rates and favorable conditions.