For many Kenyans, owning a home is a long-term dream and mortgage plans are one of the most viable ways to achieve it. A mortgage is a loan specifically designed for purchasing property, where the property itself serves as collateral until the loan is fully repaid.
In Kenya, mortgage plans are offered by commercial banks, microfinance institutions, SACCOs, and state-backed agencies like the Kenya Mortgage Refinance Company (KMRC).
Here’s a breakdown of how mortgage plans work, the types available, and what to consider before choosing one.
How Mortgage Plans Work
A mortgage allows an individual to acquire a home by paying a portion of the total cost (down payment) upfront, and the rest in monthly installments over several years. These installments include both the principal (the loan amount) and interest.
Most mortgage plans in Kenya range from 10 to 25 years, with interest rates either fixed or variable depending on the financial institution. If a borrower fails to repay the loan, the lender has the legal right to repossess and sell the property to recover the funds.
Types of Mortgage Plans in Kenya
- Fixed-Rate Mortgage
This mortgage has a constant interest rate throughout the repayment period. It offers predictability in monthly payments and is ideal during times of fluctuating market interest rates. - Variable-Rate Mortgage (Adjustable-Rate)
The interest rate on this mortgage changes depending on market conditions. Initial rates may be low, but they can increase or decrease over time, affecting monthly payments. - Graduated Payment Mortgage
Payments start off low and gradually increase over time. This type is often suited for young professionals expecting their income to grow. - Construction Mortgage
Specifically for individuals building a home, this loan is disbursed in stages aligned with construction milestones. Once the house is complete, it is converted into a regular mortgage. - Islamic (Shariah-compliant) Mortgage
Offered through Islamic banking, this model avoids interest charges and instead uses structures like Murabaha (cost-plus financing), where the bank buys and resells the house at a profit margin.
Key Players in Kenya’s Mortgage Market
- Kenya Mortgage Refinance Company (KMRC): Provides affordable, long-term funding to primary mortgage lenders like SACCOs and banks, enabling them to offer low-interest mortgages to clients.
- Commercial Banks: Banks like KCB, Equity Bank, Co-operative Bank, and Standard Chartered are major mortgage providers.
- SACCOs: Some SACCOs provide mortgage loans or housing loans to members at more competitive interest rates.
- Affordable Housing Partners: Through partnerships with the government’s Affordable Housing Programme, some institutions offer subsidized mortgage options to low- and middle-income earners.
Requirements to Qualify for a Mortgage in Kenya
To apply for a mortgage, most lenders will require:
- A steady income or verifiable employment
- A deposit (usually 10%–20% of the property’s value)
- A valid Kenyan ID or passport
- Bank statements and payslips (usually 6 months)
- Credit history check
- Property documents (sale agreement, title deed, etc.)
Benefits of Mortgage Plans
- Makes homeownership accessible with manageable monthly payments
- Offers financial discipline through structured repayment
- Builds long-term equity and investment
- Allows for tax relief on interest paid (under some plans)
Challenges of Mortgage Plans in Kenya
- High interest rates (often 12–15%)
- Strict qualification criteria
- Limited access for informal sector earners
- Fear of repossession due to loan default
Mortgage plans remain a powerful tool for enabling Kenyans to own homes, especially in urban areas where housing costs are high. As the government continues to promote affordable housing and enhance mortgage accessibility through initiatives like KMRC and tenant purchase schemes, more citizens are expected to benefit.
However, before committing to a mortgage, it’s crucial to compare offers, understand the terms, and ensure you have a stable financial plan to meet long-term obligations.
