Breaking News: Kithure Kindiki: I am taking a break from politics
Many people dream of owning a home. Maybe you are one of them, but you lack enough money to buy or build one outright.
You have heard of various financing options available to you and others of a similar mind. You know that you can approach a lender – mostly, a bank – and request for a home loan. You have, however, not been bold enough to do so.
You are not alone. Millions of Kenyans who earn some income retain that dream of living in a house they own. However, they are yet to make that move, out of the fear that they cannot afford a loan.
Myths about loans, and especially, mortgages, abound in this country. They keep people from visiting a financial institution to learn all they need about mortgages.
A mortgage is a loan a lending institution advances a borrower to acquire a home.
How would you know whether you qualify for a mortgage if you don’t ask a lender to assess your eligibility?
Annually, only about 30,000 mortgages are outstanding. This is quite low compared to the prevailing situation in other big economies in Africa.
Yet the need – nay, demand – for housing is massive. Indeed, the country has a cumulative deficit of more than 2 million low-income houses.
Various firms and institutions are busy trying to bridge this gap by building more units. What needs to increase is the number of individuals who can afford these houses or build theirs.
The first step is to visit a lender. There, as a person who dreams of owning a home, you can ask all the hard questions you can think of.
For example: Based on your financial situation, do you qualify for a mortgage – and how much? What type of mortgages are available in the market? Do you have to make a deposit first? Can you get up to 90 per cent financing or much more? How long should the mortgage last – five years, ten, 20 or even 25? Can you accelerate repayments and clear the loan earlier than agreed? Can you get another loan to renovate the house after some years? What interest rate will apply to your mortgage?
Changing mortgage landscape
The mortgage landscape has been changing in recent years. In the past people could not access their pension funds even for home ownership. Nowadays it is possible to assign a portion of this amount as a deposit for owning a home. This year, the government amended the Retirement Benefits (Mortgage Loans) Act, Regulations Amendment, 2020. The amendment allows members of pension schemes to use up to two-fifths of their accrued pension benefits as a down payment for a home.
Besides, most of the more than 40 banks in the country offer loans to people who want to buy or build own homes.
Co-operative Bank is one of the banks that offer mortgages, not just to people living within the country, but also to Kenyans in the Diaspora.
You can visit any Co-op Bank branch to learn more about mortgages and have your questions about certain loan myths addressed.
You can also visit https://goodhome.co.ke/ for more information and to sample the properties available for you.