Ezesha(105% Financing) Frequently Asked Questions

Ezesha (105% Financing) Frequently Asked Questions

1.    Who is the target market for Ezesha?

This product is ideal for customers who can qualify for a mortgage facility but are discouraged by the initial costs associated with acquisition of property. These costs include the down payment and closing costs. Therefore the target market includes the young low to medium income earners or first-time mortgage borrowers.

2.    Who is being insured under Ezesha?

It is HF that will be insured but the cost of the premium will be passed on to the customer who will be required to pay an annual premium.

3.    Is the 3% annual insurance premium payable for the whole term of the loan?

The insurance cover is committed for a period of 3 years with option of renewing it for further 3 years. The maximum period allowable under Ezesha agreement is 6 years.

4.    Will Ezesha premium be constant for the period in which it will be in place?

Yes it will.

5.    Why have we put a cap of Kes 15Million on the maximum property value or a maximum gross salary of Kes 350,000?

These parameters were agreed upon between HF and Britam who are the insurers. The initial intention of Ezesha was to target the low to medium income earners who are the most affected when it comes to raising down payments and closing costs.

6.    In the Ezesha process flow, at what point is the developer paid? Is it during loan conveyance or at disbursement?

The developer will be paid after perfection of the security. The developer will be issued with HF undertaking to pay 100% of the property value after customer returns our loan offer.

7.    At what point is the down payment paid to the vendor?

HF will issue an undertaking to pay 100% to the developer on acceptance of offer by the customer. Payments of the 10% deposit and stamp duty will be made after due diligence of title is done by advocate.

8.    Will developers accept to sign the Offer letter based on a HF Letter of Undertaking?

A Letter of Undertaking is legally binding and it compels HF to pay. Further, HF is a reputable brand in the real estate industry and developers should be comfortable with HF Undertaking.

9.    If we disburse the 10% deposit to the vendor before charging the property, aren’t we going to run the risk of finding a property with a caveat?

To avoid such a situation we will not release funds until a due diligence is done on the property. Once instructions are received by lawyer, a search is first initiated before the registration process begins hence caveats and other encumbrances will have been captured.

10.  How will we give the vendor comfort since they usually give buyers 7 – 14 days to raise the deposit?

Time is of essence to the success of this product. Due to loan amounts involved i.e. up to 10M maximum, the short approval matrix will enable approval before 7 days ONLY IF all the application requirements are complied with.

Doing it right first time is of utmost important.

11.  What happens to developers who are unwilling to accept the Letter of Undertaking and prefer cash before signing of the agreement with the purchaser?

We will offer a bank guarantee subject to security perfection. We will educate our customer that it is in our mutual interest not to make a payment without due diligence of title being conducted on the property.

12.  What happens if the vendor or the purchaser opts out?

The terms of the sale agreement addressing break of contract will apply.

13.  Is the deposit paid out by HF transferable if the deal falls through?

Terms of the sale agreement on break of contract will apply.

14.  How can an SME client qualify for Ezesha loan?

Any SME with net earnings before tax of Kshs 350,000 per month qualifies.

15.  Will the product be able to cater for buy-and-build customers?

Yes, it will.

16.  Can a customer do an equity release (Vuna Hela) using Ezesha?

NO.

17.  In case of joint applications, what happens if the joint applicants’ incomes exceed Kes 350,000?

They will not be eligible. Income ceiling applies also to joint incomes.

18.  Under normal circumstances, there is no person earning a gross salary of Kes 350,000 per month who can qualify for a mortgage of Kes 15 Million. How will we address this?

This is noted. Customers of this income would qualify for loans of up to Kes 9 Million at 16% P.A maximum tenure.  Research confirms the bulk of our home loan customers fall in this income bracket with property prices and construction loans falling within this range.

19.  What if the customer’s ability to pay restricts him/her from qualifying for an amount less than the 105% financing?

Any application above 90% will fall under Ezesha as long as customer has ability to pay and pays the premium. It’s our duty to however inform and confirm with the customer whether he/she has sufficient savings to finance the closing costs.

20.  What if Stamp duty is only 2% as is the case in areas outside a Municipality? What happens to the other 3%?

The surplus funds can apply towards legal fees, valuations and other costs necessary to enable ownership of the owner occupied property.

21.  Under Ezesha, can HF finance for valuation?

Yes as long as it fits within the 15% of property value. Customer is free to choose the closing costs that HF can finance.

22.  Can customers with existing schemes take this cover?

Yes as long as they are not in breach of the terms of the scheme.

23.  Will HF finance the commitment fees?

No.

24.  If there are enough funds remaining under Ezesha can they be used to finance the Initial Mortgage Repayment (IMR)?

No. Ezesha will finance all the costs necessary to enable acquisition or construction of owner occupied property.

25.  Are there penalties for early redemption?

No. In fact, there are new laws with guidelines on how to deal with early redemption. The customer is allowed by law to give a one-month notice otherwise they are required to pay one month’s interest.

26.  What if the customer cannot be able to raise the annual Ezesha as well?

HF will offer insurance premium financing as a solution to this challenge.

27.  Is the product restricted to specific counties?

No. The product is available to all customers countrywide.

28.  Will the normal insurance covers such as life and fire insurances apply to Ezesha?

Yes. These insurances will still be applicable.

29.  Is there any other product that provides the same benefit?

Yes. Home Freedom is a pension backed home loan available to customers on a pension savings plan with a registered pension fund where these savings are used to secure an increased loan amount of up to 115% to facilitate acquisition or construction of owner occupied property.

30.  Can our customers do top-ups if the property value increases?

Yes. But within the LTV covered by property value.

31.  Since the product targets purchase and construction loans, what are we going to handle construction loans since the LTV stands at 85% due to the risks involved in the implementation of  a project?

Ezesha mitigates the high LTV risk using the insurance cover. Project implementation risks are better isolated and mitigated through our project credit appraisal and administration.

32.  Are plot loan covered under Ezesha?

No.

33.  For most schemes the LTV stands at 90%, how are we going to handle such cases?

Scheme terms as signed will always apply but addendums will be negotiated to enable allow LTV limits accommodate Ezesha.

34.  Will Ezesha be able to cover the down payment and all closing costs?

CRI will definitely cover the down payment. However, in most cases it will not cover all the closing costs but a substantial amount will be catered for so that the customer will only incur a small portion of the closing costs.

35.  Can contract employees of NGO’s (for instance people who sign one year Contracts and then renew them) qualify for Ezesha?

Yes.

36.  Ezesha will have many different anniversaries and therefore different days for renewal of the cover. How will these anniversaries be managed?

HF will manage prompts for anniversaries and renewals.

37.  For customer who are employed in the Diaspora, how do we finance them yet their LTV is 85% investment residential since they do not live in the financed house?

Those customers with families in Kenya but working abroad will be financed 90% of property value.

38.  Can a customer who has already paid a down payment apply for Ezesha and we refund directly to account?

Yes.