Loans and mortgages in Kenya
Loans and mortgages are definitely term you come across daily, it is important to note that before choosing an institution to get you loan and mortgage from, you must do a thorough research on their rates and flexibility. A mortgage will help you own your dream house within a short period of time. There are two types of mortgages in Kenya;
Floating rate mortgage
This is also called a variable or adjustable rate mortgage. It factors in fluctuating rates of the credit market; this means that the mortgage rate will go up or down depending on the market. When the rates within the credit market are high, the mortgage rate of the repayment is going to be high and vice-versa. Though risky, variable rates are often cheaper compared to fixed rates.
Fixed rate mortgage
Unlike the variable rate, the fixed rate does not fluctuate with the credit market. It has a fixed interest rate that runs through the entire term of the loan. It is usually considered the safest, though most expensive compared to variable rate mortgage.
Types of loans in Kenya.
- Business loans
- Education loans
- Personal loans
Business loans
Business loans are designed to help one grow their business, expand your products and services or even start a new business project. Business loans are essential in any economy and has always helped many businesses achieve their success.
The rates range from 15% to 20% per annum. Business loans include, LPO financing, Refinancing, Normal business term loans, Invoice discounting, contract financing, investment club loans etc.
Some banks may offer business loans for start-ups at attractive, variable interest rates.
Categories of business loans or SME Loan
- Unsecured business loans
These loans are given to customers in performing businesses without tangible security.
These type of business loans are also designed for landlords without title deeds.
These loans range from KES 100,000 to KES 1 million.
The repayment duration is 12 months with competitive interest rates.
They also take a shorter period to process and approve.
Requirements
- One must have KYC documents e.g. ID, KRA PIN, passport photo.
- Business registration certificate
- Business trading license
- Business operation records
- Six months bank statements but in some banks may require less or more.
Secured loans
For one to secure this type of business loan, your retail operational capital must be around KES 50 million or
One must produce either title deeds, logbooks, listed stock, life insurance policy or cash as collateral.
With this loan one can apply up to 300 million and it takes up to 36 months or more depending on the bank’s loan policy.
Education loans
This loan allows students who cannot afford costly university or college education to peacefully study throughout the four years in college or university and to pay off small debts acquired during their time in school.
The repayment of HELB loan is expected from the moment the new graduate gets their first job. This has allowed many students access higher education. This loan is also available for salaried students furthering their education.
The main financier for majority of the disbursed student’s loans is Higher Education Loans Board (HELB). Other institutions include Kenya commercial bank, Soma loan by Bank of Africa, Musoni education loans, Zidisha school fees, National bank of Kenya, Equity Bank.
Kenya commercial bank student loan is allows borrowers to access up to KES 300,000 for education purposes. What makes KCB Masomo loan very attractive is because the loan processing is fast and it applies very attractive interest rate for students in Kenya.
Musoni education loans is a mobile platform system that is being used when disbursing loans to students within seventy two hours after customer application, eligibility and integration has been completed through M-Usoni mobile app.
Soma loan offered by Bank of Africa allows students to access loans and for the fixed lowest interest rates of 15%. This loan is available for parents and students joining universities that can carry their own loan.
The minimum loan entry requirement is available on their website. They actually require a proof that you’re able to repay the loan and that you can be entrusted by debtor to settle repayment in due time. This education loan by bank of Africa is digitized; this means you can follow up on your loan and other transactions on your mobile phone.
Equity Bank loan, though they do not have specified loan for students they are very pro-education. They have played a major role in supporting students and have a well-known track record. They have given internship opportunities for top performing students from different parts of the country with fulltime salary and they also have “wings to fly” program that provides scholarships for best students from across the country every year.
Equity bank Equiloan allows salaried customers to meet client’s various needs and education loan is not exempted. This mean both parents and students who are eligible can access loans from equity bank. Requirements for this loan is your payslip or equivalent to prove you can repay your loan such as employment letter, identification documents etc.
National bank of Kenya provides unsecured student loans. Parents hoping to get their children education loans can apply for this loan. The minimum unsecured personal loan amount one can apply for is KES 50,000 and a possible maximum amount of KES 4,000,000. With flexible repayment options, you can get up to six years to settle the amount.
As part of CSR program National bank of Kenya has always promoted education ventures and this has allowed their customers to access education loans and by the end of the day achieve their dreams.
Personal loans
Types of personal loan are;
- Mobile loans
- Car loans
- Overdrafts
- Salary advance
- Secured and unsecure personal loans
Money borrowed from a bank, credit union or online lender that is paid back in fixed monthly installments, typically over two to 6 years. Personal loan interest rates can range from 6% to 36% and most of these loans are unsecured meaning they do not have any collateral.
A secured personal loan backed by something is usually cheaper, but you can lose your asset if you default.
Mobile loans allow customers to access instant low cost loans on self-service basis, anytime, anywhere. This provides convenience and is cost-effective way of meeting short-term financial needs. In Kenya we have several mobile loan providers such as, KCB-Mpesa, Mshwari, Branch International, Tala, Zenka, NIC bank etc. The interest rate for most mobile loans varies with the lender and they apply a processing fee of 4%. The minimum mobile loan amount one can borrow is KES 500.
Car loans in most cases are available for salaried customers. This allows them to purchase cars for personal use. The minimum amount one can borrow is KES 300,000 and the maximum amount depends on the client’s ability to repay the loan and repayment period can run up to 72 months.
Requirements for car loans are; a copy of logbook of the car to be purchased, a copy of accepted sale agreement with proof of contribution and AA Kenya/Franchise dealers valuation.
Overdraft is a short term credit loan gives you access to more than what is available in your bank account. The maximum overdraft loan limit varies with the bank giving the loan but in most cases it may be around KES 50,000 or more. This loan can be accessed once in three months as the case is in most banks and on unsecured basis.
Salary advance loan is granted to salaried employees to finance emergency needs awaiting salary receipts. Maximum amount may be up to 60% on net monthly income repayable on receipt of salary and in most cases can be available three times a year.
The following are top institutions that offer loans and mortgages in Kenya;
- Standard Chartered Bank
Standard Chartered Bank is regulated Central Bank of Kenya (CBK). The processing of loans and mortgages at standard chartered bank are faster. Their mortgages are available to both the residents and non-resident Kenyans. They are among the cheapest loans and mortgage providers. Their interest rate can go as low as 12.2%. They provide 105% mortgage financing solution.
Eligibility
- To be eligible for a loan or a mortgage at standard chartered bank a person needs to be 21 to 65 years old.
- Provide arrangement fee of 1% of the loan amount.
- Legal cost and stamp duty depending on property value and location.
- For mortgage, you should have fire insurance with the bank’s interest duty duly noted.
- You should also have mortgage protection insurance for the borrower to secure the borrower during the mortgage time.
- Valuation fee upon approval of the mortgage
- Citi Bank
Citi bank has attractive and cheaper interest rates. Approval and processing can take two to three days depending on the individual circumstances.
Their loans and mortgages are available to both employed and self-employed. To be eligible for this loan you be between 21 to 65 years old. They have a mortgage loan cheap interest rate of 12.5%. The application and processing of their loans are faster and simple with a short approval time. It is obviously a favourite mortgage and loan institution. They offer several mortgage options that assures customers of custom interest rates according to their unique need.
- Commercial Bank of Africa
Commercial Bank of Africa has attractive and competitive interest rate of 12.9%. they have available and experience relationship management on hand to advice and guide you on property evaluation and market trends. They provide all types of loans and mortgages; their mortgages repayment is flexible for up to a period of 25 years. There is no penalty for early payment.
Requirements for their loans
Prescribed loans application form.
Latest passport size photograph, photo ID and resident’s proof of the applicant.
Salary slips for the last three months and bank statement for the last three months.
For businessmen, ITR copies for last three years and five months bank statement.
- NIC Bank Kenya
NIC bank provides loans and mortgages auctions at relatively competitive interest rate of 13.4%.
They have mortgage options such as;
- Financing against your already existing house.
- Financing to buy a ready made house.
- Topping up a mortgage loan to an existing loan.
- Transferring an existing mortgage from one financier to another.
- Funding the building of residential home.
- Financing to buy a land/plot
Features and benefits of NIC mortgage
- They offer up to 90% financing for Kenyan residents and 70% financing for Kenyans in the diaspora
- They provide mortgage protection insurance cover that takes care of retrenchment, death and disability.
- They have competitive interest rates.
- They have flexible repayment period of up to 20 years
- There’s no penalty for early repayment
- It is available to both Kenyan citizens and Kenyan permanent residents.
- They range for valuation legal process by bank appointed service providers.
- Joint application is allowed.
- The minimum amount for their mortgage is Ksh1,000,000, while maximum amount is based on your ability to repay
- Interest is charged on a reducing balance basis.
They offer both loans and mortgages. Their mortgages are offered to both local and diaspora residents. They finance your home for up to 80%. They have flexible repayment period and you can apply for a top up of your loan with their KCB plus product offer. They offer several attractive bonuses on their loans and mortgages.
KCB allows various payment forms such as joint payment, rental payment and alternative payment. Their loan application and processing are faster and simple. They have a rate of 13.3% to 14%.
To be eligible for their mortgage, you must give proof that you can meet 10% financing and other cost such as stamp duty, lawyers fee and valuation fee.
Requirements for their loans
Prescribed loans application form.
Latest passport size photograph, photo ID and resident’s proof of the applicant.
Salary slips for the last three months and bank statement for the last three months.
For businessmen, ITR copies for last three years and five months bank statement.
- CFC Stanbic Bank
They offer both loans and mortgages and they have a competitive interest rate 14.1%. They finance up to 90% of the total construction cost as per the bill of quantities from legally registered quantity surveyor.
A finished property can get up to 105% mortgage financing.
Requirements for their loans
Prescribed loans application form.
Latest passport size photograph, photo ID and resident’s proof of the applicant.
Salary slips for the last three months and bank statement for the last three months.
For businessmen, ITR copies for last three years and five months bank statement.
- Barclays Bank of Kenya
This bank offers both loans and mortgages at a very competitive interest rate of 14.4%. They have a flexible repayment period of up to 25 years. They provide up 95% financing for their mortgage. They have a security charge on the property.
Requirements for their loans
Prescribed loans application form.
Latest passport size photograph, photo ID and resident’s proof of the applicant.
Salary slips for the last three months and bank statement for the last three months.
For businessmen, ITR copies for last three years and five months bank statement.
- Consolidated Bank
They offer both solid scholar loans and home mortgages. Consolidated bank loans are designed specially for salaried individuals to meet personal expenses such as medical, school fees, household goods and capital.
They have unsecured personal loan of up to 2 million. They have flexible repayment loan period of up to 60 months.
Their loans are quickly approved and they also have emergency loans ranging from Ksh3000 to Ksh50000.
They have an interest 15.1%.
Requirements for their loans and mortgages
Prescribed loans application form.
Latest passport size photograph, photo ID and resident’s proof of the applicant.
Salary slips for the last three months and bank statement for the last three months.
For businessmen, ITR copies for last three years and five months bank statement.
- Co-operative bank
Also regulated by central bank of Kenya. They offer both loans and mortgages.
Their loans range from business, SMEs lending, education loans and personal loans.
Their personal loans can go up to 7 million.
Their mortgages have a maximum period of 20 years for single dueling units and 10 years for residential commercial units.
They allow a grace period of 6 months. The house can be used as collateral and its rental income can be used to repay the mortgage. They have an interest rate of 14%. Co-operative bank reserve the right to change their interest rate.
Requirements for their loans and mortgages
Prescribed loans application form.
Latest passport size photograph, photo ID and resident’s proof of the applicant.
Salary slips for the last three months and bank statement for the last three months.
For businessmen, ITR copies for last three years and five months bank statement.
Loans and mortgages drive economy in a very positive manner. With right decisions one can grow their business well and also not need to pay rent where they live. The biggest asset one can always hope for is a home, owned individually, this in major economies across the world is made through mortgage financing from available banks and financial institutions.
