How You Can Get A Loan To Buy Land

A quick answer is YES, you can get yourself a loan to buy that plot of land your dream of. Owning land is now made easier than ever before.
Louis J. Glickman, a real estate investor, and philanthropist once said, “The best investment on earth is earth.” Most people agree with this, however, most are discouraged by the perception that land is expensive. As Fanaka real estate, we seek to demystify this myth.

Buying land is not expensive, you can buy a plot and build your dream home with the little money you have. This goes for both those in employment and those running small businesses.

You also do not need to wait until you have saved enough to invest in real estate. The exponential appreciation of the land and other real estate assets has for long blocked young people from investing in real estate. Thanks to title loans from commercial banks and other financial institution, the wave is changing, and more people are now able to buy land and construct their homes.

What to consider when buying land in Kenya

Buying land or investing in real estate is a long-term commitment. It is one of those things in life where you just have to get it right the first time (Mostly true for those who look to build residential homes for their own use).
As a real estate investor, there are many boxes you will need to check before finally settling on a location.

There continue to be cases of people buying “Air.” (I mean that in the literal sense). Many people have lost their life saving on scrupulous land brokers. Others have ended up paying lots of money to corrupt government entities with the aim of speeding up the purchase process.

We want to let you know that you can buy genuine land in Kenya without bribing anyone, without being duped, and with the little amount you have.
So, what do you need to consider when buying land in Kenya?

As a first-time land buyer, there is an ideal process you should follow when seeking to invest in real estate. This applies to those paying for the land themselves and those being financed by a bank. Also, do the same whether you are buying from a company or from an individual.
You will need to:

  • Make a physical site visit to the area you seek to buy the land
  •  Let the seller know you are interested in purchasing the plot and ask for a copy of the title deed
  •  Do a search of the land, you can do this online yourself or have a lawyer do it for you.
  •  For large portions of land, you can engage your owner surveyor to make sure everything checks out.
  •  Have the seller draft a sales agreement, sign it, and have it authenticated 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 own valuation. From experience, 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 banks 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.
    Apart from the cost of the land, there are different charges that will apply throughout the purchasing process. Have your bank, and the company selling the land discloses all of them.

What you need to get land financing

For most bank 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

You 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