Home loan facilities have become very competitive to banking in Kenya with very many loans available to you
This is a facility that assists you to acquire your own home. Various banks and financial institutions will give home loans or mortgages to those who have applied and their applications are successful.
The loan applications are processed within given times for most lending institutions. To ensure that your loan is processed within the minimum time limit, ensure to fill out the applications forms completely and properly. Give all the required documents.
The requirements from each bank are different and they depend on the strategy of the bank. Some of the banks require that the mortgage is partly financed by you the applicant. The amount that is required will vary from bank to bank. The bank may tell you that they will finance the mortgage up to 80% or 90% of the property sale amount. This means that you have to get the extra 20% or 10% and deposit it in your loan account with the bank.
Additional costs associated with your Home loan
There are other costs that are associated with the home loan, apart from the property cost. They are:
- Interest on the mortgage amount. The interest will be different depending on the bank or institution financing the loan. The length of the repayment period will also affect the interest charged on the loan. Less interest will be paid if the loan is for a shorter time.
- Stamp duty – This is a percentage cost on the cost of the property. This is a fixed amount which depends on the laws of the land. The current rate is 4% in Kenya
- Valuation fees – This fee is dependent on the valuer. Most banks have their own list of approved valuers which you should get before you have your property valued.
- Legal fees – This will be dependent on the loan amount. The higher the amount of loan the higher the legal fees requested. The bank or lending institution will have their list of preferred law firms. It is important to get this list from the institution providing the loan facility
- Bank Facility fee, which is a fee that is charged by the banks for facilitating the loan. It is a one- time charge. It differs from bank to bank and is dependent on the bank.
- Property insurance may be required by some banks for the life of the loan. This is important as it insures your property so long as the loan is being repaid. The fee is paid annually.
- Mortgage life policy is also dependent on the bank. This policy means that is you died while the loan was still outstanding the bank would claim the balance from the insurance company. This is an annual fee
- Penalty charges for lump-sum or full clearance before the stated life of the loan. These penalties will depend on the bank or institution. Some lending institutions give you a discount if the loan is repaid earlier than agreed.
It is therefore important as you approach the bank for the loan to find out the other costs that will be associated with the home loan or mortgage. Before the loan is taken, you should shop around to get the best offers that will suit your pocket and circumstances.