The Co-operative Bank in partnership with the Kenya Mortgage Refinance Company (KMRC) has launched the cheapest mortgage plan in Kenya.
The mortgage plan is aimed at availing affordable housing to persons who earn not more than Sh. 150,000 per month.
“Affordable housing loans are now available to customers for the purchase of developed residential homes as well as to undertake plot buy and build for residential homes,” said Co-op Bank in a statement to Bizna Kenya.
This plan is 3 per cent points cheaper than the average mortgage rate of 12.9 per cent that is estimated by the Central Bank of Kenya to be the average mortgage rate in Kenya.
To be eligible for this plan, aspiring customers will need to have a maximum household gross income of Sh. 150,000. They will also need to have at least six months of consistent banking with the Co-op Bank.
According to the bank, Kenyans who qualify will have the option of purchasing a ready residential house, buying a plot and building.
A spot check on the terms of this housing loan shows that aspiring home owners will be financed for one unit. The security for the loan will be the property under purchase and the loan will go at a rate of 9.9 per cent per annum on reducing balance.
There will be a facility fee of 2 per cent of the loan amount that will be a one-off payment. “The maximum loan tenure will be for a period of 15 years for employed applicants, and 10 years for self-employed applicants,” Co-op Bank said in a statement to Bizna Kenya.
The minimum loan amount of will be Sh. 500,000 and the maximum loan amount will be Sh. 6 million for properties in the Nairobi metropolitan area. The amount will drop to a maximum of Sh. 5 million for properties outside the Nairobi metropolitan area.
Interestingly, top-up loans will be allowable under commercial rate and upon repayment of the primary loan for a period of at least 12 months.