Frequently Asked Questions on Housing and Mortgages

Question: When is the best time to start planning for a mortgage?

Answer: The journey to property ownerships begins with putting funds aside as savings to achieve your long term goal of home ownership. This can be achieved by opening a 1^st HOP Account, a Crossover Savings Account or through purchase of a Housing Development Bond. It is advisable to begin saving early for home purchase since mortgage is a long term commitment that requires self-discipline.

The 1^st Hop account is an excellent starting point for young people who want to develop the savings discipline. It enables you to save up to Sh.4,000 per month tax free. Also, interest on the account for amounts below Sh.3,000,000 does not attract tax. The account’s key advantage is that it builds deposits and its benefits accrue when you invest in a housing project.

The Crossover Savings Account offers you very attractive features that enable you to save for long term projects such as home ownership or any other dreams you have.  These features include: earning high interest on the account deposits as well as loyalty points on every deposit, access to 100 per cent mortgage financing, up to 25 per cent discount on commitment fees, up to 2 per cent discount on mortgage interest when applying for a mortgage loan and much more.

The Housing Development Bond (HDB) on the other hand equally suits those who want to set aside money for putting up a home. The HDB requires a minimum of Sh.50,000 and offers a saving of 5 per cent on withholding tax. HDB gives you the flexibility of savings and withdrawal in case there is an urgent need for the money.

As your income grows, it is wise to put more money aside. The challenge with most of us is the culture of first spending then saving what remains.

Q: Do I have to wait until I have found a property I want to purchase before I can apply for a loan?
A: You do not have to wait until you find that property but it is strongly recommended. By getting approved now, you will know exactly what you qualify for before you begin shopping. Sellers will know you are a serious buyer because your financing is already arranged. This may be an advantage when the property comes at a discount for early buyers. To approve you and determine the amount for which you qualify, Housing Finance takes into account your current income, debt and credit history. Once you find a property, and sign a sales agreement, we can immediately begin processing your loan.
Housing Finance, though The Property Point, can also help you in the search for Property. The Property Point is a one-stop property shop that features displays from various suppliers of property in Kenya, thus enabling customers to access a wide range of options under one roof. This eases the process of acquiring property. In addition, The Property Point has also entered into strategic partnerships with suppliers of building and construction materials such as cement manufacturers, tiling, paint manufacturers, cabling etc to make all these services accessible under one roof at negotiated discounts.

Q: When buying a flat, what are your rights of ownership?

A: When you purchase a flat, you obtain a sub-lease from the main title. The main title is usually held in the name of a management company. The directors of this management company are the home owners of the court where the flat is located. The management company charges a service charge which caters for items such as payment of water and electricity in the common areas, security and garbage collection, among others.

Q: Does HF give individuals construction loans, and if so, what are the criteria for qualification and what percentage do they finance?

A: When it comes to construction finance, the firm will need to first ascertain the type of house you want to put up. We also establish the purpose for putting up the house, i.e. if its owner occupier you qualify for 80 per cent and for rental we disburse up to 70 per cent of the financing cost.

Q: Is age considered during the mortgage application process?

A: Yes. The repayment period of a mortgage is determined by the borrower’s age and the retirement age in their organization (if they are employed) or the age of 65 years if they are in business. The number of years you will pay for the mortgage will be determined by how old you are now and how long you have to get to retirement age. The maximum repayment period for any mortgage is 20 years.  Apart from age, your source of income will also determine the repayment period.

Q: What should I do if I can't make a payment on loan?

A: When you realize that your finances are unable to meet your mortgage obligation whether due to retrenchment or otherwise, immediately we advice you to talk to Housing Finance who will help you come up with options. Do not avoid the bank at this time as this will be viewed as default.    

How do I get more information?

Visit our website www.housing.co.ke or write to us on propertypoint@housing.co.ke or diaspora@housing.co.ke or call us on 3262000/ 3262364/