How to Get a Mortgage in Kenya: Everything You Need to Know!

Mortgages in Kenya

Buying a home is a major milestone in life. But, it’s also a big financial decision. While it might seem like there are many steps involved with getting a mortgage, your journey can be made easier and more seamless if you know what to expect and how to prepare for the process.

This blog post will cover everything you need to know about mortgages: the different kinds of mortgages available, the benefits of each one, how to finance your new home, and where to find more information on Kenya’s mortgage market today. Read on as we explore how to get a mortgage in Kenya!

What is a mortgage?

A mortgage is a loan that you give to the bank in exchange for giving them ownership of your home. The bank will then agree to let you live there as long as you make monthly payments.

The monthly payments are based on the size of the loan, the interest rate, and how much equity (the difference between what your home is worth now and what it was purchased for) you have in the property.

The different types of mortgages

Affordable Housing Project

There are two types of mortgages: fixed mortgages and variable mortgages. Fixed mortgages have a fixed interest rate for the lifetime of the loan. Variable or adjustable mortgages, on the other hand, have a variable interest rate that can be adjusted periodically.

Fixed mortgage rates are typically lower than variable rates because the borrower is protected from market-driven increases in rates. Usually, they’re less flexible, but this might not necessarily be a bad thing if you’re sure you’ll be in your home for life.

Fixed-rate mortgages

If you’re buying a home and want to keep your monthly payments steady, a fixed-rate mortgage is a perfect investment. With this type of mortgage, your interest rate and monthly payments will remain the same for 30 years, so you won’t have to worry about fluctuating rates. Fixed-rate mortgages are typically recommended for people who plan on staying in their homes for more than 5 years.

One disadvantage of a fixed-rate mortgage is that if interest rates rise, your monthly payment would also increase. For this reason, it’s important to get a fixed-rate mortgage only if you think interest rates will stay low over the next few years.

Variable-rate mortgages

One type of mortgage is a variable-rate mortgage. This type of mortgage has an interest rate that changes periodically and usually corresponds with the country’s central bank’s lending rate . For example, if the regular Kenya Commercial Bank (KCB) lending rate is 12 percent and your mortgage is at a variable rate, you can expect your monthly payments to increase as the KCB lending rates go up. Variable-rate mortgages are one of the most popular kinds of mortgages because they’re typically more affordable than fixed-rate mortgages.

How to finance your new home

When purchasing a home, you will need to consider how you are going to finance the purchase.

There are many types of mortgages that can be used to finance your new home. Mortgages vary by the type of loan, the length of the loan, and whether or not there is a down payment.

Fixed-rate mortgage A fixed-rate mortgage means that your interest rate and monthly payments will remain constant for the life of the loan. These loans typically require higher down payments than other types of mortgages because they offer more security to lenders.

An adjustable -rate mortgage (ARM) is an adjustable-rate mortgage with an interest rate that may change periodically according to changes in an index. This type of loan is best for those who want to take advantage of lower rates now but also plan on selling their house in a few years when rates increase.

mortgage relief kenya 2021

There are a lot of great reasons why you should apply for a mortgage in Kenya. If you’re considering buying your first home, there may be opportunities to get relief on your tax burden. Here’s what you need to know about mortgage relief in Kenya:

  • Relief is available only when the property is used as a primary residence.
  • You can get relief when buying or refinancing a primary residence at the time of purchase and at re-mortgage.
  • There are different types of relief:
  • Mortgage Interest Relief (MIR)
  • Taxable Rental Income Relief (TRIR)
  • Repayment Relief Scheme (RRS)
  • Rural Housing Tax Credit Scheme (RHTCS)

mortgage process Kenya

The mortgage process in Kenya is tedious and can take up to 3 months to complete. Depending on your situation, the following steps might be required:

1 ) Application: You will need to apply for a mortgage with a bank or financial institution. There are various types of mortgages available in Kenya, so it is important to know which one best suits your needs and expectations.

2) Eligibility: Your bank will assess the feasibility of your application and whether you meet the requirements.

3) Approval: If eligible, you will then receive an approval from your lender with detailed information on how much you can borrow and what condition you need to fulfill.

4) Loan Agreement: Once this is done, the final step would be signing a loan agreement between you and the lender containing all conditions agreed upon previously. This is when the mortgage process officially begins!

How mortgage works in Kenya

A mortgage is a loan that gives you the funds to purchase a home. It’s an important step in buying property because it helps to protect your investment while allowing you to enjoy the benefits of homeownership. A mortgage is secured by the value of the home, which means that if you default on payments, you risk losing your property.

Kenya’s mortgage market has changed over time and mortgages are now more accessible than they were before. Developers are able to build on land with more flexible financing options, which means people who would ordinarily not be approved for a mortgage due to their debt-to-income ratio can still get funding for their new property. This flexibility makes mortgages more obtainable, so having one isn’t just for people with perfect credit scores anymore.

Conclusion

A mortgage is a loan that you give to a lender in order to purchase a property.

Fixed-rate mortgages are the most common type of mortgage in Kenya. For this type of mortgage, the interest rate stays the same throughout the life of the loan.

Variable-rate mortgages are when the interest rate is set at a certain rate when they are first issued, but they can change at any time.

The best way to finance your new home is through a mortgage.

There are many different types of mortgages available in Kenya. A mortgage is a loan you give to a lender in order to purchase a property. The most common type in Kenya is the fixed-rate mortgage where the interest rate stays the same throughout the life of the loan.

Variable-rate mortgages are when the interest rate is set at a certain rate when they are first issued, but it can change at any time.

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