How to get mortgage in Kenya

Shopping for a mortgage loan can be very frustrating especially for a fist-timer.

Here are six important tips for getting a mortgage in Kenya.

1.) Mortgage – A mortgage is a loan taken out to buy a home with the house acting as the collateral. Under rare circumstances will a mortgage be less than your monthly rental. After adding local authority rates, utility bills, furnishing and maintenance bills, you’ll see your monthly costs go up by at least a third of your rent.

You must therefore look at the likely monthly repayments. There are quite a good number of mortage providers in Kenya willing to give you attractive interest rates, including Housing Finance Limited and Savings & Loan – a subsidiary of Kenya Commercial Bank.

2.) Price of propertyAccording to real estate agents in Nairobi, property prices in many neighborhoods in the capital have doubled, and in some cases tripled, since 2006. They say the situation is the same in the coastal city of Mombasa, where new residential and commercial buildings are being sold for unprecedented prices, even before the buildings are completed.

3.) Your deposit The higher the deposit you put down, the lower the loan you need to borrow. And of course the lower the amount you want to borrow, the more interest rate options you get.

The key criteria in Kenya is always based on whether you are better off reducing your monthly mortgage repayments compared to earning a return in some other form of investment.

4.) Interest rates – There are two things you need to know about Kenya interest rates generally, the current rate and the future expectations of where interest rates will go.

Current interest rates in Kenya are set depending on amount you want to borrow and duration (term) you want to borrow for. Variable interest which basically means that it moves as general interest rates. So future expectations become of added importance.

5.) Monthly repayments – From the above, you should now have the bits that will help you decide what type of house you’ll buy based on its monthly or annual cost. You just need to consult a housing finance provider on this or just check out for Kenyan real estate websites offering mortgage calculators.

6.) Location – This is a feature unique to Kenya where some banks only offer mortgages in specified towns.

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