Can I Get A Loan To Buy Land?
The quick answer is YES. You can obtain a loan to turn your dream of owning a plot of land into reality. Louis J. Glickman, a renowned real estate investor and philanthropist, once highlighted, "The best investment on earth is earth."
Despite the perception that land is expensive, Fanaka Real Estate aims to demystify this myth, making land ownership more accessible than ever.
Owning land has become easier than before. Whether you're employed or running a small business, you can purchase a plot and build your dream home without waiting until you've saved a significant amount.
The exponential appreciation of land and real estate assets, which often deterred young investors, is changing, thanks to title loans from commercial banks and financial institutions.
Key Considerations When Buying Land in Kenya
Buying land or investing in real estate is a significant, long-term commitment. It's crucial to get it right the first time, especially for those building residential homes for personal use. As a real estate investor, consider these factors:
- Make a physical site visit
- Request a copy of the title deed
- Conduct a land search online or with a lawyer
- Engage a surveyor for large portions of land
- Draft and authenticate a sales agreement at the Huduma center
How to Buy Land through a Bank in Kenya
Banks in Kenya are more than willing to engage their customers in their pursuit to own land. If your banker does not, then we recommend you fire them and go for the once that are willing to support your dream.
Generally, different banks will offer different percentages of the cost depending on their valuation. Most commercial banks will want to shy away from ancestral lands and agricultural freehold land for different reasons.
So then, how do you buy land using a bank loan? First, you need to understand that banks will rarely offer loans to buy from individuals. Most commercial banks will want to deal with incorporated companies or real estate dealers. As with other loan products, a bank will want to confirm your ability to pay before advancing the loan.
They will, therefore, want to check your finances and your credit history to compute the loan amount to advance. For those who qualify for this type of asset financing, the process of buying land with a bank loan is as follows: The bank will require the title deed to do a search to ascertain ownership.
They will then engage different professionals to do a valuation of the land. This ensures that the land is not overvalued. If everything checks out, the bank will pay the agreed amount.
Given that the plot is the collateral, the title will bear the bank's name or your name together with that of the bank depending on the percentage of the amount advanced. Also depends on the bank. The title can only be transferred to your name once the loan is repaid in full.
Land Financing Requirements
For most banks offering land financing or loans on title deeds, the requirements for those employed and those in self-employment may differ. For starters, if you are employed, most banks will require:
- A KRA pin certificate
- Your three months' payment slip
- A bank account statement for the last 6 months and
- A letter from your employer
For those in self-employment, most financiers will require:
- An identification document ID or Passport
- A KRA pin certificate
- Audited financial records for the last 3 years
- 1-year bank statement among other documents
Who Offers Loans for Buying Land in Kenya
TYou can get land financing from most of the commercial banks in Kenya. Talk to your banker and have them explain what they offer and what their requirements are. Some common loan products out here include:
Commercial bank of Kenya plot purchase loan
CFC Stanbic bank vacant land loan
Faulu Kenya real estate business loan
National bank of Kenya plot purchase loan among others
