A report by NIC Bank and Housing Finance states that Kenyans are in desperate need of decent and affordable housing. The survey reports that 84% of the country’s urban population lacks the means to even take up a mortgage. In light of these developments, some lenders have seen fit to roll out a variety of mortgage products to suit their clients’ needs.

Despite the different lending rates banks have to offer, cheaper loans from secondary mortgage lenders and even Britam’s 100% lending service, there is a procedure that must be followed before anyone can apply for a loan.

1. Proof of Ownership

According to Housing Finance, one of the country’s premier real estate dealers, the first thing any potential home owner needs once they have secured the capital for a down payment is a copy of the property title. This helps the lender ensure that the application is, in fact, legitimate.

2. House Plan Blueprints

Blueprints help the lender to estimate the cost of construction. They also prove the legitimacy of the proposed project to the authorities while helping the builders and contractors use it as a template for the construction process.

3. Approved Documents from City Hall

For house construction loans (also known as a single dwelling development loan), borrowers also need City Hall approved building designs along with a price quotation for the materials.

4. Approval from NEMA

The National Environmental Management Authority (NEMA) is in charge of approving construction projects that may pose a threat to the environment.  This comes in line with the Environmental Management and Coordination Act of 2009.

5. Construction Contract

Housing Finance states that borrowers also need a copy of a construction contract with the appointed professionals. These include architects, land surveyors and contractors.

6. Registration Certificates

Borrowers need registration certificates from both the architect and the structural engineer. They also need a performance bond from the appointed contractor. This is a document that shows the contractor’s previous track record and provides the involved parties with a risk insurance cover. These, along with application fees can rack up a cost of no less than KES 65,000 (Read this for more information).

7. Mortgage Account

Some lenders like Barclays, Standard Chartered, Housing Finance and KCB require the borrower to open a mortgage account. For Housing Finance, the borrower must open a Lengo account. Standard Chartered and Barclays Bank offer Current Accounts while KCB has Savings and Loan mortgage accounts.

8. Occupancy Certificate

The International Finance Corporation (IFC) notes that Kenyans must attain an occupancy certificate before the borrower can actually be referred to as a home owner. The certificate is earned when the City Council approves the building based on the architectural designs.

Real Estate service providers like Housing Finance manage the statutory requirements on the home owner’s behalf. They deal with the local council, the cost of construction materials, the professionals needed to do the job as well as the legal counsel.

Housing Finance notes that construction costs are based on the materials used, the professional charges and the interior design of the structure. The lender states that comparing the exterior size of the proposed house to a finished structure can help borrowers to get a rough estimate of the cost of construction.

However, Housing Finance warns that construction costs may go above the borrower’s budget. As such, the lender encourages the potential home owner to set aside an extra 10% in case of emergencies.