This is a financial question that resonates with a majority of Kenya’s working class. At the age of 30 when many Kenyans start settling into family life, the desire to own land and a home becomes the main goal.
This is never an easy milestone to achieve. Many Kenyans are left juggling between the rising cost of living and thinning payslips laden with multiple mandatory deductions, compounded by rising land and home prices. Data from the Kenya Economic Survey shows that up to 83 percent of Kenyan workers are in the informal sector and relying on irregular incomes.
According to Peterson Magua who is a realtor based in Nairobi, land and housing will continue to be in-demand value-driven assets with good return on investment due to population growth and rapid urbanization.
“The rising population has pushed the demand for land high as people look for places to settle away from the hustle and bustle of the city. The rise in land value has also been helped by the rapid urbanization in Kenya as cities expand and infrastructure projects take shape,” he says.
For instance, statistics indicate that land in Nairobi and its metropolitan areas has appreciated by an average of 10-15 percent per year over the last decade, higher than most traditional investment returns. According to the Nairobi Metropolitan Area Land Report, land in Kenya appreciates at an average of 10 percent per year, with some areas experiencing even higher rates. Some of the areas that have in recent years experienced a high growth rate in land value are Ngong, Konza Technopolis, Matuu, and Nakuru due to the ongoing expansions and infrastructural projects.
So how can Kenyans like Daniel own a plot where they can build their own home? How can they access affordable funding for that ready-made apartment or bungalow they want to raise their families?
When Bizna Kenya scouted the market for available options, we found out that the NCBA Group has a property financing package that combines land and home loans with the options of financing for a fully built home and financing for the construction of a home according to the design desired by the aspiring homeowner.
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“We offer home loans in Kenya of up to 105 percent of the value of the property for persons seeking to persons seeking to acquire, construct, and finance property in major urban and rural areas within major towns in Kenya. These properties may be for owner-occupation or investment,” the NCBA Group states.
Interestingly, it only takes six easy steps from the time you apply to the time money is disbursed for the acquisition. These steps include application, approval, offer letter, property valuation, security perfection/conveyance, and disbursement. Here is a breakdown of property loans you can get at the bank to turn your dream of owning a home into reality:
NCBA Group Plot Financing
NCBA is offering financing of up to 70 percent of the plot value for plots in Nairobi, Mombasa, and other major urban and rural areas within major towns. In this package, it offers repayment plans with tenors ranging from 36 to 60 months. The minimum loan amount is Sh500,000, with facility fees of 1 percent of the loan value for local clients, and 2 percent for diaspora clients.
NCBA Group Home Purchase Loan
This mortgage facility offers financing of up to 105 percent of the value of the property. The loan’s terms are friendly, with a repayment period of up to 25 years.
Michael Njeru, a homeowner in Joska in Machakos County, is one of the beneficiaries of this product. Despite not having enough funds to finance the construction of his modern 3-bedroom house, Njeru’s dream became a reality after approaching NCBA Group with the plan.
“I had a good plan and strategy, and I think that’s how I made it to build the house. I did not have much money then, but I trusted God that everything would be okay. So, in February 2022, I approached NCBA with the plan to build a house, and they offered me Sh3 million funding,” he says.
At the same time, the bank has tailor-made property finance partnerships. A spot check reveals that the bank currently has affordable housing financing arrangements for two, three, and four-bedroom properties in Tatu City, Kiambu; Mtwapa, Mombasa-Malindi Road; Athi River, along the Mutungoni Road; Tilisi, off Ngecha Chunga Mali Road; and Kasarani next to Stardom Hotel.
NCBA Group Construction Loans
This property financing solution will give you the freedom to build your home to your design specifications, customization, and feel. With this product, you can either construct a Single Residential Unit or investment residential multiple dwellings. “You will get affordable loan interest rates and flexible repayment periods of up to 25 years,” NCBA states. You will also be provided with approved experts to build your house, guaranteeing quality. These experts will include qualified and professional Architects, Quantity surveyors, Structural, Mechanical, and Electrical engineers, who will supervise the construction process end-to-end.
The minimum construction loan amount you can get is Sh3 million, with facility fees of 1 percent of the loan amount for local currency facilities and 1.5 percent of the loan amount for foreign currency facilities.
Equity Release
If you would like to unlock the value of your property with financing against an existing mortgage or on a property as collateral, this is the product for you.
This product provides financing of up to 90 percent of the property’s value on single and investment residential units, and up to 80 percent of property value for residential multiple dwellings and investment commercial property. Borrowers enjoy a repayment period of up to 5 years for loans of Sh100,000 to Sh2 million and up to 25 years for loans above Sh2 million.
