KCB Presentation
INTERNATIONAL INVESTMENT FORUM
24TH TO 26TH AUGUST 2014
LEISURE LODGE BEACH HOTEL IN DIANI, KWALE
COUNTY
OVERVIEW OF THE KCB
MORTGAGE PRODUCTS
Presenter
Pius Mutua
Corporate Relationship Manager - Mortgage Business.
KCB Mortgage Division.,
Standard Street.
18th Floor Lonrho House,
P.O.Box 45129 - 00100
Nairobi/Kenya
Office Tel : + 254 20 342 190, +254 20 2251328 ;+254 20 344203
Mobile: + 254 722 845 460 ; +254 715 786 884
What is a Mortgage?
• It’s the transfer of an interest in property to a lender as
security for a debt on condition that the interest will be
returned to the owner when the terms of the mortgage have
been satisfied.
• To mortgage is to offer a building as security for a loan.
• They are long term in nature - Loan tenure/period of up to 20
years.
• Security for mortgages is a property.
KCB Mortgage Products
•
•
•
•
•
•
•
•
•
Loans to finance acquisition of Residential property
Loans to finance acquisition of Commercial property
Plot loans
Equity Releases and loan take overs
Mortgage plus - Top up loans
Construction loans (for residential & commercial properties)
Plot and construction loans
Special scheme loans - Cash backed, Check off, Hybrid
Joint Ventures with land owners
Why take a Mortgage?
•
•
•
•
•
•
Security-Peace of mind
Retention of staff
Motivates staff
Capital appreciation
Take advantage of the tax incentives
Save on rent
Who qualifies for a mortgage
from KCB?
• Employed Kenyan Residents
• Self Employed Kenyan Residents
• Kenyans in Diaspora
• Employed Resident Non-Kenyans i.e. expatriates.
• Self Employed Resident Non-Kenyans
• Companies and Partnerships.
The only condition is the property offered as security must be in
Kenya
Mortgage Schemes
Cash-Backed Mortgage Scheme
• Employer places funds with KCB at a rate to be agreed on. KCB
will then provide mortgage finance to employees at
concessionary rates determined by adding a 5 %
administration fee to the deposit rate
Check Off- Normal check off
• Interest rate under this option is variable at base rate less a
negotiated discount
Advantages of Schemes
• Discount on Interest Rate
• Reduced interest rate especially for
cash backed schemes
MORTGAGE REQUIREMENTS
Employed Persons
• Employers letter of introduction - to verify terms of
employment and retirements age
• Latest 3 month pay slips
• Latest 6 month bank statements (any bank),certified
• ID / Passport / PIN Certificate
• Open mortgage related savings account
• Copy of title for proposed security (minimum lease 33 years)
• Repayments up to a maximum of 75 % of net pay
• Professional valuation by a Valuer on the KCB panel
Companies & Partnerships
•
•
•
•
•
•
•
•
Certificate of incorporation/Certificate of registration of business
name
MEMATs/Certified copy of partnership deed where applicable
Bank statements for the latest 12 months
Audited accounts for latest 3 years
Income tax returns and filing receipts for the latest 2 years.
Copies of ID Cards for Directors/Partners
Three passport size photographs for directors/ Partners
Companies only - Board of Directors resolution authorizing: -The
borrowing and repayment thereof, Opening of a KCB account,
Provision of securities for the loan, Nominating signatories to
operate the KCB account and execute securities or witness
company seal on security documents -
Requirements cont….
• Valid sale agreement.
• Open mortgage account
• Copy of Title to property being purchased/charged (minimum
lease term 45 years).
• Net disposable income 75 % of net income
• Valuation report plus photographs of property being financed
and/or charged, together with certificate of official search
from Land Registry. Valuation done by approved KCB valuer
• Tenancy Agreements for rented property(ies)
Construction Loans
To be submitted in addition to the normal requirements
• Submission of approved building plans.
• Submission of approved structural drawings.
• Submission of priced Bill of Quantities (BQ’s) duly signed
• Submission of approval from the Environment Management
Authority, OR a letter of Exemption from the regulator’s
requirements- for multiple units
• Project team( Architect, Engineer, QS, Contractor, Project
Manager) to submit their comprehensive CV’s, registration
certificates with current practicing license & profiles detailing
successful works carried out in the last 5 to 10 years.
Construction Requirements cont..
• Submission of a duly executed formal contract between the
developer (sponsor) and the contractor.
• Submission of a contractor’s all risk policy with the interest of
KCB duly noted.
• Submission of a performance bond from a reputable bank or
insurance firm for 10% of the contract value
Note: Draw down in stages on a reimbursement basis against
an architect certificate, branch inspection and valuer stage
inspection reports
Other Requirements
• For contract staff - history of previous employment
and CV are very crucial.
• In cases where guarantors are needed- complete
information of the guarantor is needed.
• Where Rent Income is considered a copy of tenancy
agreement and copy of title must be submitted.
Sources of Income Considered
Verifiable and regular income such as: • Salary
• Rent income
• Business Income
• Commissions
Our Key Mortgage Features
•
•
•
•
•
Interest rate – Base minus 1.5 %, and as low as 5 % for schemes.
Residential property interest rates as low as 12.9% p.a
Repayment period-up to 25 years
Upto 100 % -105 % Financing
Flexibility in assessing repayment ability - Joint income considered,
rental income, employment income, business income etc
• Release of Construction funds in a max 4 installments or as per
architect certificates.
• Applicants to service interest during construction
Key Mortgage Considerations
•
•
•
•
For salaried customersPeriod -25 years subject to retirement age
For residential properties
For Commercial/Investment Properties Repayment term upto
20 years maximum.
• When considering business income for mortgage repaymenta maximum repayment period -10 years.
• For land purchase- LTV - 70% and LT is 10 years
• Joint Borrowing allowed
Closing Costs
Internal Costs
• Appraisal fees – 1% of the loan amount
0.5% for cash backed schemes
External Costs
•
•
•
•
•
•
Stamp duty
Valuation fees
Mortgage registration
Insurance premiums
Legal fees
Any other professional fees
Start your journey to
owning a home