Top 10 Mortgage Providers In Kenya To Consider When Buying A Property.

Top 10 Mortgage Providers In Kenya To Consider When Buying A Property.

What comes to mind when you hear the word "MORTGAGE"? Share your thoughts in the comment section below.

Most would agree that owning a house in Kenya today is a significant accomplishment. However, it's expensive and quite a challenge.

The cost of land keeps rising, construction material prices are through the roof, and there's more.

Now, imagine a way to make owning your dream house a reality, regardless of your net worth.

That's where a mortgage comes in! This guide includes:

  • What a mortgage means
  • What's needed to get a mortgage
  • Where to find an affordable mortgage
  • Top mortgage providers in Kenya

What is a mortgage? 

A mortgage is a loan offered by banks and other financial institutions to home buyers. The property is used as collateral for the loan. Most banks will require a 20% down payment to get started.

One advantage of taking a mortgage is that with each payment, you gradually own a piece of the property. This differs from paying rent, where ownership doesn't accumulate.

Taking a mortgage divides property ownership into two parts: equity (what you own) and debt (what the bank owns). With each mortgage repayment, you increase your equity, aiming to own the property by the end of the amortization period.

Another benefit of a mortgage is the potential to increase the property's value. For instance, if you take a 4,000,000 Ksh mortgage and sell the property for 7,000,000 Ksh, you'd profit 3,000,000 Ksh, paying the bank only what you owe them, without sharing the profit.

Types of mortgages in Kenya:

There are two types based on the rate paid on the loan:

a) Floating rate mortgage: Also known as a variable or adjustable-rate mortgage, this type fluctuates based on market rates. The mortgage rate changes with the market, potentially cheaper but riskier compared to fixed rates.

b) Fixed-rate mortgage: This mortgage type has a constant interest rate throughout the loan term. Safer but often more expensive compared to variable rates, with a risk of being locked into a higher rate if interest rates fall.

Types of loans you might be offered: 

To cater to different borrowers, financial institutions offer varied loans, including:

  • Owner-occupied residential mortgage
  • Investment residential mortgage
  • Construction loan for building from the ground up
  • Equity loans using accrued equity for extra funds, usable for various purposes.

Top mortgage providers in Kenya: 

Here are some with their average annual interest rates, though these figures are estimates and may change over time:

  • Housing Finance Group: 12.2%
  • Standard Chartered Bank: 12.5%
  • Citibank Kenya: 12.9%
  • Commercial Bank of Kenya: 13.3%
  • KCB Bank: 13.4%
  • NIC Bank Kenya: 14.1%
  • CFC Stanbic Bank Kenya: 14.4%
  • Barclays Bank of Kenya: 14.9%
  • Co-operative Bank: 15.1%
  • Consolidated Bank: 15.4%

Please note: The figures are estimates and may vary over time.

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