KMRC’s Affordable Mortgage Options for Middle-Income Buyers

Bridging the Gap – Applicants will be subjected to a thorough vetting process to ensure they meet all the set criteria for the affordable mortgage.

KMRC And Cooperative Bank Affordable Housing Loans in Kenya
  • The KMRC affordable mortgage will be disbursed through Co-operative and NCBA Bank.
  • Only individuals earning Ksh 150,000 or less will be considered for the mortgage.
  • The KMRC mortgage interest rate is between 9.5% and 9.9% for a 15-year mortgage, which is cheaper than the industry average of 12.9%.

The Kenya Mortgage Refinance Company is set to offer affordable mortgages to make home buying affordable for middle-income earners.

KMRC, which is partially owned by the Kenyan government, was licensed in September 2020, and it offers home-buying loans to people earning Ksh 150,000 or less.

According to a joint press statement KMRC and Co-op Bank issued, “To ensure that the affordable mortgage benefits the intended users, only Kenyans earning not more than Sh150,000 a month are eligible, with the maximum loan amount capped at Sh6 million,”.

KMRC And Cooperative Bank Affordable Housing Loans in Kenya

The refinancer currently works with financial institutions to offer affordable mortgages and has partnered with Co-operative and NCBA Bank to offer the best home-buying loan in the market.

The set mortgage rate is 9.9% for Cooperative Bank and 9.5% for NCBA Bank, which is lower than the current mortgage industry average.

According to the Central Bank of Kenya, the industry average mortgage rate is 12.9%.

Who Can Apply for the Loan?

The eligibility criteria states that mortgages will only be offered to people seeking to purchase a house for residential occupation by the purchaser or an immediate relative.

A verifiable income source is also mandatory for both salaried and self-employed individuals. The mortgage is only available for Kenyan citizens.

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What Are the General Terms and Conditions of the Mortgage?

The maximum mortgage repayment period is 25 years, and interested parties must have life insurance to cover the outstanding balance.

The property comes with an unencumbered title deed, which will be used as collateral for the property until the house is paid off.

READ ALSO: What to Know About Property Laws in Kenya

Home buyers seeking to buy homes from metropolitan areas will get a higher loan value approval than home buyers looking to buy homes in rural areas. Other important criteria that will be considered include the payment-to-income ratio, which should not exceed two-thirds of the borrower’s net income.

The maximum mortgage limit is Ksh 6 million, and the minimum lease period for the purchased property is 40 years.

READ ALSO: A Beginner’s Guide to Mortgages When Buying a House

Lastly, the borrower will be charged interest on a reduced balance, which makes the mortgage repayments significantly cheaper in the long run.

KMRC And Cooperative Bank Affordable Housing Loans in Kenya

KMRC’s Implementation Strategy

So far, Ksh 549 million has already been disbursed to Co-op bank, and borrowers can use the home-buying loan to buy ready-built homes nationwide.

KMRC and Co-op bank will also work with developers such as Unity Homes, Zima Homes, and Maisha Development to expand the market base of the product. NCBA bank also plans to hold monthly webinars to familiarize themselves with the product.

Nixon Aswani - Content Strategist
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