Frequently Asked Questions
Do you consider joint applications?
Yes, we do allow joint applications for a mortgage.
What do you consider as security for the mortgage?
The house being bought will serve as security for the mortgage.
Can an apartment serve as security for a mortgage with the bank?
Yes. The bank may accept an apartment as security for a mortgage, provided the apartment has a sublease on the land it sits on. In Kenya, this is acceptable proof of ownership which a bank may charge as security for a mortgage.
What are the additional costs associated with a mortgage?
- Commitment fees for the mortgage
- Stamp duty for transfer of property – 4% of property value for Nairobi, Mombasa and Kisumu and 2% of property value for upcountry properties
- Stamp duty for registration of charge – 0.1% of the loan amount
- Legal fees – between 1.5% and 2% of the loan amount
- Valuation fees – approximately 0.25% of the property value
- Insurance fees – for life cover over the applicant’s life and for fire (and other perils) over the property taken as security for the mortgage
Is the product eligible for self-employed pension scheme members or it is strictly for employed pension scheme members only?
Both employed and self-employed members of a pension scheme are eligible to access this product provided they intend to acquire a residential house that is ready for occupancy.
Can I use this product to buy or construct a commercial property?
This product only applies when buying a residential house. The product does not apply for commercial property at all.
Can I use this product for construction of a residential house?
This product does not apply for construction of a residential house.
Does the product allow for joint applications? E.g. Spouses under the same or different pension schemes?
This product allows for joint applications for spouses under the same or different pension schemes. It does not allow for joint applications for siblings, a parent & child, or any other kind of relation/partnership apart from spouses.
Why does the scheme charge the property under purchase?
This is to ensure that the 40% of accessed pension funds are not diverted but fully utilized into acquisition of a residential house and to avoid transfer of the house to a third party
Who caters for the cost of charging the property to the pension scheme?
The member/buyer caters for the cost of charging the property to the pension scheme too.
Are there any penalties for early mortgage repayment or lumpsum payments for the mortgage?
There are no penalties for early redemption and accelerated loan repayment. If anything, the member gets to save by redeeming their loan early since interest payable within the shortened period lowers significantly.
Can I use my pension to purchase a property more than once?
This facility is only applicable once.
How long does it take for the secondary charge to be created?
The secondary charge is done concurrently with the primary charge
Can I use my 40% of accrued benefits to offset a residential mortgage currently in place?
This product cannot be applied to offset an existing facility.
Can I apply for this product just before retiring then I repay the loan from my monthly pension upon retiring?
No. This product is applicable for members still in active employment and yet to attain retirement age, since the 40% of accrued pension benefits is released as a down payment for a house to be paid for in cash or paid as a mortgage over the remaining number of years to retirement.
Am I eligible for this product if I am about to retire?
Yes. Any member below the retirement age is eligible for this product as long as the 40% of accrued benefits is sufficient to cover the entire purchase price. However, for members whose 40% of accrued benefits is not sufficient, the approval will be based on the ability to repay and time to retire.
What are the costs associated with the mortgage?
- Commitment fees for the mortgage.
- Stamp Duty for transfer of property – 4% of property value for urban areas like Nairobi, Mombasa and Kisumu and 2% of property value for upcountry and rural areas.
- Stamp duty for registration of charge – 0.1% of the loan amount.
- Legal Fees – between 1.5% and 2% of the loan amount.
- Valuation fees – approximately 0.25% of the Property Value.
- Insurance fees – for life cover over the applicant’s life and for fire (and other perils) over the property taken as security for the mortgage.
Does the 40% of pension benefits also cater for ‘other processing costs’ associated with the mortgage?
No. other processing are to be catered for separately by the member.
What type of properties can I buy under this product?
Any residential property with valid ownership documents, that befits your style, income and meets your need for a home. This could be a bungalow, maisonette, town house or apartment.
What is the maximum term for the available mortgage loans?
Up to 20 years for employed, subject to retirement age
What happens after valuation of the property if the value differs from the sale price?
The Bank would finance the lower of the value or the sale price.
What would happen if interest rate changes during the life of the mortgage?
Interest rate on this mortgage product is variable but computed on reducing balance. One is free to prepay the mortgage by making lumpsum payments or redeeming the balance as there are no penalties for this.
Can I buy a property outside Nairobi with this product?
Yes, provided the property is within a municipal and has a title deed/certificate of lease as proof of ownership.
Does my credit history play a part in my mortgage qualification?
Yes; Your past credit history plays a major part, as negative credit listings may affect your chances of getting a loan approval from the Bank.
What would happen if I got retrenched from my current job while still servicing the mortgage?
One of the covers we have in place for the mortgage is the life cover, which carries a retrenchment rider, such that in the event of retrenchment, Insurance steps in to make the monthly mortgage instalments for 6 months.
What would happen if the house under purchase is destroyed by fire, flooding etc?
In the event the property is destroyed by a fire, Insurance will come in to restore the property to its former self.
What would happen if I die while the loan is still unpaid?
In the event of death while still servicing the mortgage, insurance comes in to redeem the mortgage by clearing any outstanding mortgage balance. This would in effect mean that the property under purchase would be discharged to the next of kin.
What happens if the product was a joint application by 2 spouses and one dies?
Depending on the structure, Insurance will either redeem the whole or part of the loan
Should I continue paying land rates and rents upon taking up a mortgage facility under this product?
Where the rates and rents are applicable, you should continue paying them to the respective jurisdictions as they are payable by the property owner. Remember, with a mortgage, the property is registered in your name but charged to the Bank as collateral for the mortgage.
What is the maximum mortgage loan amount I can get under this product?
The maximum amount you can qualify for is dependent on your ability to repay based on the pay slip, existing rental income or existing business income.