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Kenya

HF in new mortgage plan

NAIROBI, Kenya, Nov 24 – Housing Finance has signed the country\’s first pension mortgage agreement with Local Authorities Pension Fund (LAPTRUST) that will enable its members use their pension to access mortgages.

LAPTRUST becomes the first major pension fund to take advantage of the amendment of the Retirement Benefits Authority Act which provides for members to use their pension scheme funds as guarantee or collateral for housing loans.

Under the agreement, members of LAPTRUST can now use up to 60 per cent of their accumulated pension benefits as additional collateral for Housing Finance Mortgage Solutions including: Owner Occupier, Plot Purchase, Construction and Investment Residential 
Mortgage (delete).

The mortgage firm will also extend the Provident Fund property solutions through its property supply division which include project finance and Property Point.

Housing Finance Managing Director, Frank Ireri said the Home Freedom pension mortgage solution is an alternative way to fund any aspect of one\’s home.

"The Local Authorities Pension Fund benefit due to an employee can be used as security against the loan without eroding the retirement benefit," said Mr Ireri.

LAPTRUST Managing Trustee Hosea Kili said the organisation has partnered with Housing Finance to spearhead the development of suitable tailor made mortgage finance products and property solutions for Lap Trust members and stakeholders.

"We have plans to deepen the partnership with Housing Finance for the benefit of Lap Trust members and stakeholders," said Mr Kili.

LAPTRUST has a total of 24,000 members drawn from over 175 local authorities as well as 60 water and sewerage companies spread across the country. The Trust\’s estimated value stands at approximately Sh7 billion.

The pension mortgage solution is structured in such a manner that there is no disinvestment out of the fund, so fund assets remain intact, earning the highest possible return. Borrowers\’ monthly repayments are effected via a salary deduction.

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The guarantee enables the mortgage firm to lend, in addition to the full open market value of the property one is purchasing, closing costs in the form of upfront deposit, stamp duty, valuation fees and legal fees among others.

"Housing Finance is now in a position to provide over 100 percent financing in Home Freedom," said Mr Ireri.

Mr Ireri said a number of LAPTRUST members have expressed interest in the firm\’s construction solution, known as Makao. Housing Finance last year introduced a Makao house type for under Sh1 million with a monthly mortgage repayment of only Sh15,000.

The Makao concept provides potential home owners with a one-stop solution. Housing Finance in conjunction with a consortium of professionals in the building process manage the whole process on behalf of the prospective owner.

Makao is convenient building solution that aims to help potential home owners who already own a piece of land to build a home cost-effectively.

Housing Finance manages the whole process on behalf of the prospective owner.

Housing Finance recently launched the Crossover Savings Account which offers strong incentives for saving towards a mortgage. The Home Freedom Pension-Backed mortgage product is expected to complement the Cross-over product.

Official figures indicate that 150,000 new and additional housing units are required in urban areas every year with actual supply estimated at 35,000 units annually.

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