This is a loan that a bank or mortgage lender gives you to help finance the purchase of a house. The agreement gives you the ownership of a property and you can start living in it as soon as the mortgage has been approved and paid to the property owner.  The bank will own the title of the property until the mortgage repayments are complete.

Depending on the mortgage type that you pick, there is an easy way to work around the whole processing of a mortgage loan. For Fixed Rate Mortgages, the amount of interest charged is fixed till the end of the repayment period. Normally, it’s a little expensive to acquire.

For Adjustable Rate Mortgage, the interest keeps changing depending on the market, where the loan repayment is done on reducing balance method. This is one of the most common types in the market.

Having made up your mind regarding the mortgage here is how to acquire it.

1. Appraisal and Approval

Here you get to know if you qualify for a mortgage and how much you qualify for. You can send an application to one of the mortgage financiers like Housing Finance, Commercial Bank of Kenya.

The application will be verified against specific spectrums like income, amount of personal expenses, length of the contract, details of the property, the age of the applicant, your credit score among others. From this the application will either be approved or rejected.

After the application has been approved, you have to ensure you have the property that you want to purchase.

2. Processing

After the loan has been approved. This stage will mainly involve you providing the bank with some of the required documentation and detail for verification and validation. Some of the documents include KRA Pin, ID, Six month’s  Bank Statement, 3 Months payslips original or certified copies

3. Offer Letter

At this stage, you are issued with an offer letter. An offer letter is any type of mortgage that receives lender approval based on a job offer letter. The lender uses your future income your estimated earnings in your new position to calculate your ability to repay and determine the amount you can borrow. The letter will stipulate the terms and conditions of the loan.  For the phase to be complete you will have to accept the offer terms provided to you by the financial institution

4. Collateral

This is where the lender acquires the property that is being used as collateral. Collaterals cover for defaults at any point in the agreement. If it is an apartment the lender will get the original certificate, transfers, and other relevant documentation. After the lender has acquired the rights to the property, they will register a charge against the title for the sum borrowed.

5. Payment

The lender then gets the money and either forwards it to the borrower or the seller of the property depending on the agreement signed.

The whole process from application to receiving the payment takes on average 90 to 180 days.

There are additional charges that accrue from loan. These are the key elements which cause the difference in the cost of getting a mortgage between different banks.

  • Mortgage interest rates
  • Negotiation fee 2.5%
  • Ledge Fee charged on a monthly basis
  • Legal fees
  • Valuation fees
  • Commitment fees
  • Stamp duty


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