Friday, July 19, 2024

Co-op Bank launches Kenya’s first pension-backed mortgage

Pension Mortgage Scheme:  The Co-operative Bank of Kenya has launched the first pension-backed mortgage loan facility in Kenya. The mortgage loan facility will target members of pension schemes in the country. Co-op bank launched the facility in partnership with Enwealth Financial Services Limited.

The new facility is expected to enable the over 3 million members of pension schemes in Kenya, who otherwise would have found it difficult to raise enough funds to buy a home, to qualify for a mortgage. In addition, the facility will enjoy an extended repayment period of up to 20 years, subject to the retirement age of the borrower.

The new mortgage is the first such facility in the market, and has been made possible by the recent changes to the Retirement Benefits (Mortgage Loans) Act, Regulations Amendment 2020 law. These changes now allow members of pension schemes to utilize up to 40 per cent of their accrued pension benefits as down-payment to buy a home.

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Jacquelyne Waithaka - Director, Corporate and Institutional Banking at Co-op Bank and Peter Waiyaki - Board Chair, Enwealth Financial Services Limited, sign a partnership agreement to launch the Pension-backed Mortgage Loan at Co-op Bank’s Property Hub in Nairobi. Looking on are Head of Mortgage Finance at Co-op Bank Chris Chege (extreme left) and Simon Wafubwa, Managing Director, Enwealth Financial Services Limited - Bizna Kenya
Jacquelyne Waithaka – Director, Corporate and Institutional Banking at Co-op Bank and Peter Waiyaki – Board Chair, Enwealth Financial Services Limited, sign a partnership agreement to launch the Pension-backed Mortgage Loan at Co-op Bank’s Property Hub in Nairobi. Looking on are Head of Mortgage Finance at Co-op Bank Chris Chege (extreme left) and Simon Wafubwa, Managing Director, Enwealth Financial Services Limited – Bizna Kenya

This facility is targeted at pension scheme members whose 40 per cent of their pension benefits cannot cover the full cost of buying a house. In those circumstances, a member will approach the Bank to access a credit facility to cover the difference.

With this facility, a pension scheme member can purchase a developed property anywhere in Kenya with a ready title deed or certificate of lease, provided that the house is a residential property for the member’s own occupation. The application can be done by an individual pension scheme member or jointly with a spouse thereby consolidating their pension benefits to access a higher amount.

Speaking during the launch event held at the Co-op Bank Property Hub, the Director Corporate Institutional Banking at Co-op Bank, Mrs. Jacqueline Waithaka, lauded the partnership between Co-op Bank and Enwealth Financial Services that brought about the new home ownership solution, adding,

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“This product is a deliberate response by the bank in support of the Government’s affordable housing pillar of the Big Four Agenda. We are excited to pioneer this innovation that will enable a wider pool of Kenyans to realize their dream of owning a home,” she said.

Speaking at the launch, the Chief Executive Enwealth Financial Services Simon Wafubwa said that the new home-ownership solution that gives our clients access to affordable mortgages in line with the new Retirement Benefits regulations.”

“Owning a home and having an adequate income at the point of retirement are most critical pillars for a lifetime of financial well-being and dignity,” he said. His sentiments were echoed by the Chairman of Enwealth Peter Waiyaki who reiterated the need for innovative social security financial products that are responsive to the needs of times as a way of achieving economic resilience.

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“The pessimist may complain about the wind while the optimist would expect it to change but through strategic synergies, the leader adjusts the sails. This partnership between Enwealth and Co-op Bank seeks to adjust the sails for the mortgage landscape in the country,” said Waiyaki on the new pension mortgage scheme.

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