What is a Mortgage? It’s the transfer of an interest in property to a lender as security for a debt on condition that the interest will be returned to the owner when the terms of the mortgage have been satisfied. To mortgage is to offer a building as security for a loan. They are long term in nature - Loan tenure/period of up to 20 years. Security for mortgages is a property.
KCB Mortgage Products Loans to finance acquisition of Residential property Loans to finance acquisition of Commercial property Plot loans Equity Releases and loan take overs Mortgage plus - Top up loans Construction loans (for residential & commercial properties) Plot and construction loans Special scheme loans - Cash backed, Check off, Hybrid Joint Ventures with land owners
Why take a Mortgage? Security-Peace of mind Retention of staff Motivates staff Capital appreciation Take advantage of the tax incentives Save on rent
Who qualifies for a mortgage from KCB? Employed Kenyan Residents Self Employed Kenyan Residents Kenyans in Diaspora Employed Resident Non-Kenyans i.e. expatriates. Self Employed Resident Non-Kenyans Companies and Partnerships. The only condition is the property offered as security must be in Kenya
Mortgage Schemes Cash-Backed Mortgage Scheme Employer places funds with KCB at a rate to be agreed on. KCB will then provide mortgage finance to employees at concessionary rates determined by adding a 5 % administration fee to the deposit rate Check Off- Normal check off Interest rate under this option is variable at base rate less a negotiated discount
Advantages of Schemes Discount on Interest Rate Reduced interest rate especially for cash backed schemes
Employed Persons Employers letter of introduction - to verify terms of employment and retirements age Latest 3 month pay slips Latest 6 month bank statements (any bank),certified ID / Passport / PIN Certificate Open mortgage related savings account Copy of title for proposed security (minimum lease 33 years) Repayments up to a maximum of 75 % of net pay Professional valuation by a Valuer on the KCB panel
Companies & Partnerships Certificate of incorporation/Certificate of registration of business name MEMATs/Certified copy of partnership deed where applicable Bank statements for the latest 12 months Audited accounts for latest 3 years Income tax returns and filing receipts for the latest 2 years. Copies of ID Cards for Directors/Partners Three passport size photographs for directors/ Partners Companies only - Board of Directors resolution authorizing: -The borrowing and repayment thereof, Opening of a KCB account, Provision of securities for the loan, Nominating signatories to operate the KCB account and execute securities or witness company seal on security documents -
Requirements cont…. Valid sale agreement. Open mortgage account Copy of Title to property being purchased/charged (minimum lease term 45 years). Net disposable income 75 % of net income Valuation report plus photographs of property being financed and/or charged, together with certificate of official search from Land Registry. Valuation done by approved KCB valuer Tenancy Agreements for rented property(ies)
Construction Loans To be submitted in addition to the normal requirements Submission of approved building plans. Submission of approved structural drawings. Submission of priced Bill of Quantities (BQ’s) duly signed Submission of approval from the Environment Management Authority, OR a letter of Exemption from the regulator’s requirements- for multiple units Project team( Architect, Engineer, QS, Contractor, Project Manager) to submit their comprehensive CV’s, registration certificates with current practicing license & profiles detailing successful works carried out in the last 5 to 10 years.
Construction Requirements cont.. Submission of a duly executed formal contract between the developer (sponsor) and the contractor. Submission of a contractor’s all risk policy with the interest of KCB duly noted. Submission of a performance bond from a reputable bank or insurance firm for 10% of the contract value Note: Draw down in stages on a reimbursement basis against an architect certificate, branch inspection and valuer stage inspection reports
Other Requirements For contract staff - history of previous employment and CV are very crucial. In cases where guarantors are needed- complete information of the guarantor is needed. Where Rent Income is considered a copy of tenancy agreement and copy of title must be submitted.
Sources of Income Considered Verifiable and regular income such as: - Salary Rent income Business Income Commissions
Our Key Mortgage Features Interest rate – Base minus 1.5 %, and as low as 5 % for schemes. Residential property interest rates as low as 12.9% p.a Repayment period-up to 25 years Upto 100 % -105 % Financing Flexibility in assessing repayment ability - Joint income considered, rental income, employment income, business income etc Release of Construction funds in a max 4 installments or as per architect certificates. Applicants to service interest during construction
Key Mortgage Considerations For salaried customers- Period -25 years subject to retirement age For residential properties For Commercial/Investment Properties Repayment term upto 20 years maximum. When considering business income for mortgage repayment- a maximum repayment period -10 years. For land purchase- LTV - 70% and LT is 10 years Joint Borrowing allowed
Closing Costs Internal Costs Appraisal fees – 1% of the loan amount 0.5% for cash backed schemes
External Costs Stamp duty Valuation fees Mortgage registration Insurance premiums Legal fees Any other professional fees