Kenya Mortgage Refinance Company (KMRC) is a government-backed institution that aims to provide affordable long-term financing to primary mortgage lenders in Kenya. The company’s main goal is to increase the number of Kenyans who own homes by making it easier for them to access mortgage loans.
How does KMRC work?
KMRC partners with primary mortgage lenders such as banks, microfinance institutions, and saccos to provide long-term funding for housing loans. The company raises funds from capital markets and then lends it to the primary mortgage lenders at a lower interest rate. The primary mortgage lenders, in turn, use the funds to provide affordable housing loans to Kenyans.
The mortgages provided by KMRC are targeted towards low and middle-income earners who would otherwise not be able to access affordable housing financing.
What are the benefits of KMRC?
One of the major benefits of KMRC is that it provides long-term funding to primary mortgage lenders. This means that the lenders can offer longer mortgage repayment periods, which in turn reduces the monthly repayment amounts for the borrowers.
KMRC also offers lower interest rates to primary mortgage lenders, which makes it easier for them to provide affordable housing financing to Kenyans. With lower interest rates, the primary mortgage lenders can then offer lower interest rates to borrowers.
Furthermore, KMRC provides a guarantee to the primary mortgage lenders, which reduces the risk of default. This makes it easier for the lenders to lend to borrowers who would otherwise not be able to access housing financing.
Who can access KMRC funding?
KMRC funding is available to primary mortgage lenders such as banks, microfinance institutions, and saccos. The primary mortgage lenders must meet certain requirements to qualify for KMRC funding.
The primary mortgage lenders must have a valid mortgage lending license, be in good financial standing, and have a minimum capital requirement of Kshs 1 billion.
How can one access mortgage financing through KMRC?
To access mortgage financing through KMRC, one needs to approach a primary mortgage lender who is a partner of KMRC. The borrower will then go through the normal mortgage application process with the primary mortgage lender.
Once the mortgage application is approved, the primary mortgage lender will then access funding from KMRC to finance the loan.
What are the requirements for a mortgage loan?
The requirements for a mortgage loan vary from lender to lender. However, some of the common requirements include:
- Proof of income
- Proof of employment
- Valid identification documents
- Proof of residence
- Bank statements
The borrower must also have a good credit score and a stable source of income.
What is the interest rate for KMRC-funded mortgages?
The interest rate for KMRC-funded mortgages is determined by the primary mortgage lenders. However, KMRC provides funding to the primary mortgage lenders at a lower interest rate, which in turn allows them to offer lower interest rates to borrowers.
What is the maximum repayment period for KMRC-funded mortgages?
The maximum repayment period for KMRC-funded mortgages is 25 years. However, the actual repayment period may vary depending on the terms of the mortgage agreement between the borrower and the primary mortgage lender.
What are the risks involved in taking a mortgage loan?
Taking a mortgage loan comes with certain risks. One of the major risks is defaulting on the loan. If a borrower fails to make timely repayments, they risk losing their home through foreclosure.
Other risks include changes in interest rates, which may increase the monthly repayment amounts, and changes in the value of the property, which may affect the borrower’s equity in the property.
How can one mitigate the risks of taking a mortgage loan?
One of the ways to mitigate the risks of taking a mortgage loan is to ensure that the borrower can comfortably afford the monthly repayments. This can be achieved by calculating the debt-to-income ratio and ensuring that it is within the recommended range.
Another way to mitigate the risks is to take out mortgage insurance, which provides coverage in case of default or death.
What is the role of the government in KMRC?
KMRC is a government-backed institution, and the government plays a key role in its operations. The government provides guarantees for the borrowing undertaken by KMRC and also provides seed capital for the company.
The government also provides policy and regulatory support to KMRC to ensure that it operates in compliance with the relevant laws and regulations.
Conclusion
KMRC is an important institution in Kenya’s housing finance sector. Its goal is to increase access to affordable housing financing for low and middle-income earners. By partnering with primary mortgage lenders, KMRC provides long-term funding at lower interest rates, which in turn allows the lenders to offer affordable mortgage loans to Kenyans.
While taking a mortgage loan comes with certain risks, borrowers can mitigate these risks by ensuring that they can comfortably afford the monthly repayments and by taking out mortgage insurance.
Overall, KMRC is a positive development in Kenya’s housing finance sector, and it is expected to play a significant role in increasing access to affordable housing financing for Kenyans.