The Kenya Mortgage Refinancing Company (KMRC), established eight years ago to ease mortgage financing for individuals, is swiftly unlocking home ownership, especially for young people.

For a long time, getting a commercial bank mortgage was quite a challenge, with interest rates oscillating between 12% and 17%, and sometimes peaking to as high as 18 to 21% depending the borrower’s risk profile.  This trend has left Kenya with fewer than 30,000 active mortgages, according to Central Bank of Kenya (CBK).

Co-operative Bank and KMRC are stepping in to fill this financing gap, which also seeks to open doors to the growing youthful population into home ownership. Those in banking say KMRC, the state-linked agency, is playing a significant role, especially given that it gives “cheaper” long-term and fixed-rate funds to financial institutions so mainstream lenders can pass the savings down to individuals, providing affordable mortgages at around 9% interest.

Co-op Bank has created the ‘KMRC-Coop Bank Mortgage’ targeting individuals seeking to own homes. Under the arrangement, KMRC provides the funds while Co-operative Bank oversees the financing.

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Mr Evan Mwangi, a mortgage specialist and real estate expert at Co-operative Bank demystifies mortgages for youth, mostly in their 20s, eyeing high-end properties. Speaking on Co-op Bank Youth Forum on Youtube, Mr Mwangi says owning a dream home is not wishful thinking as many youths imagine.

KMRC was created to support the government’s affordable housing agenda. Mr Mwangi says Co-operative Bank is not necessarily targeting those at the bottom of the pyramid, but moderate-to-low-income earners who previously could not qualify for traditional mortgages.

KMRC-Coop Mortgage requirements

A number of documents are needed to apply for the mortgage, including pay-slips for the latest three months, a letter from employer confirming employment terms and status, which could be a contract or permanent, bank statements for the latest six months, copy of ID or passport, and KRA PIN Certificate.

Besides, you will need approved building plans, structural drawings, priced bills of quantities and National Construction Authority Certificate.  “You must have approved drawings and BQ prices from a quantity surveyor and all must be approved by county government to ensure you are building within the required stipulation of the law,” Mr Mwangi says. The applicant must also have property details like a copy of the title deed, sale agreement, or letter of offer for the property being purchased.

Existing obligations also carry weight; this entails offer letters and loan statements for any other active loan facilities.  In so far as a borrower meets the above requirements, Mwangi says: “It is also good to look at the ‘in case of anything’ how safe am I… will you service the loan if your contract is terminated or if something (God forbid) happens,” he says.

Mr Mwangi says a common mistake many young people make that hinders them from investing in real estate, is being careless with income. He says buying an apartment, a standalone house or a piece of land most likely begins with a goal. And at 20, managing a home loan would be easy since it comes with a maximum repayment window of up to 25 years, or until retirement age.

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