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Learn about Mortgage

Mortgage Pre-Approval

To be approved for a mortgage, you need to provide a copy of your identification card, if you are not a Kenyan resident, you are required to provide a copy of your passport and work permit. Six months bank statements either from a previous bank or your current bank. If you are employed, you will need to provide a contract of employment and an introduction letter from your employer confirming that you work in that company. Some banks will offer 100% financing depending on the cost of the property, so you need to hand in a title deed or a document from the developer that shows you want to buy the house. You also need a registered power of attorney and three months latest payslips.

Mortgage Interest Rate

The current mortgage rates in Kenya range from 16 percent to 21 percent and this is dependant by the bank. In July this year, Central Bank of Kenya increased the interest rates from 10.00 percent to 11.50 percent, this is the highest level since October 2012. The bank is expected to make further adjustments in August, 2015.

How Does Refinancing Work?

Most institutions offer refinancing options especially if you have a good credit score. Since you will be applying for a new loan, you will be required to produce the same documents as for mortgage pre-approval the only difference is, they will be very keen to see how consistent you are repaying the other loan. People take refinancing if the mortgage rates are lower, so that they are able to repay the previous loan. Refinancing is also done in real estate when you want to purchase a property.

Frequently Asked Questions

What is a mortgage?

A mortgage is a loan that buyers can use to purchase a property, and that is secured against the property itself. If buyers cannot repay the debt, then the lender takes possession of the property.

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What is the maximum amount I can borrow?

The total amount you can borrow usually depends on your debt-to-income ratio or credit score, which is determined by the borrower's ability to repay their debt and their credit history. The monthly payment should generally not be more than a third of the borrower's gross income.

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Where can I get a mortgage?

Always use certified financial institutions, such as banks or credit unions, to avoid any scams.

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What are the different fees that apply?

The fees depend on the type of financial institution, but in addition to reimbursing the capital - the amount of money that was lent - borrowers usually need to pay interest every month that can be negotiated with the bank.

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What is the difference between a fixed and an adjustable interest rate?

In a fixed-rate loan, the interest rate remains the same for the whole duration of the loan. In adjustable-rate mortgages, the rate varies depending on the economics and monetary policy of the country.

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What happens if I cannot pay my debt?

The lender may foreclose and seize the property, which will become their possession.

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Do I need mortgage insurance?

Usually no. However, if the amount of money needed is very high compared to your income or your capital, then financial institutions will ask you to take out mortgage insurance.

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What is the best time to get a mortgage?

You should wait until you have a regular source of income to take out a mortgage. A period of high inflation is also usually beneficial for debt owners, since inflation reduces the debt burden in real terms, and debts are generally not indexed to inflation.

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How much capital do I need to be granted a mortgage?

The more capital you bring, the lower your interest rate will be. Banks usually require a minimum amount of capital, often around 20 percent of the total amount of the loan.

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How does Refinancing Work?

Refinancing takes the current debt and changes its terms and conditions into an entire new different debt, with new obligations.

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