KMRC: Home Ownership for the Kenyan Diaspora

In this episode recorded on 10.12.2024, we are joined by Stella Mutai - HFC Kenya’s Head of Mortgage, Florah Muthaura - KMRC’s Head of Risk & Compliance, and Shadrack Etale - a Branch Manager at Stima Sacco, as we explore affordable homeownership for the Kenyan diaspora.

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Key Quotes

“ The company's primary mission is mainly to provide affordable, long-term funding to financial institutions…It is also a financial institution itself, and it's non-deposit-taking. We operate by refinancing the mortgage portfolios that the primary mortgage lenders advance to borrowers, and all our lending is collateralized. And that's why we really take a low margin to be able to pass that benefit to the ultimate borrower. This approach has really enhanced liquidity in the housing finance market, making homeownership more affordable to Kenyans.”

Flora Muthaura

 ”The interest rate is single digit, and that's our value proposition, and it's fixed for the entire duration of the mortgage… The best part about the KMRC loan is fixed for the entire duration. And that is really important because you have predictability of your repayment and you don't have to worry about your repayment going up.

We even tend to support our financial institutions by encouraging them to increase the loan-to-value ratio, which we accept up to 105%. This is mainly to cover the costs associated with processing a mortgage, such as the legal fees, valuation fees, and stamp duty.”

Flora Muthaura

 ”One of the things we also discovered from our business of lending is that most of the members will want to get a facility for constructions as opposed to purchase simply because they are able to tailor make to their tastes and preferences and that is very critical. Now what happens if that's what you want?

Number one, you have to construct a house on land. So ensure you have a piece of land that has ownership documents. That is very critical. If you come to the Sacco, and you have a land that has a title deed or certificate of lease, then the Sacco is able to give you 100% in terms of construction.

You have to know the cost of that house. If it's a bungalow, we need to have a QS give us the bill of quantities. And if it is a mansion, then ensure you have structural drawings from a qualified engineer, and, of course, the process begins with an architect giving you the plans and all those things have to be approved.”

Shadrack

Show Notes

00:00:00 Introduction

00:04:07 KMRC and Affordable Housing Solutions

00:09:19 HF Group’s Relationship with KMRC

00:11:27 KMRC’s Loan Requirements

00:12:43 Home Ownership Challenges Faced by Diaspora Customers

00:25:49 Saccos' Relationship with KMRC

00:27:45 KMRC’s Loan Process

00:32:31 Loan Repayments by Diaspora Clients

00:39:19 Saccos Supporting Diaspora Clients

00:42:35  Tax Implications, Legal Requirements, and Financial Risks

00:57:44 Closing Remarks

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