When Jackson Kathoka, a veterinary doctor based in the county of Nakuru in Kenya, began plans for constructing his house, he was worried about the ability to access affordable mortgage financing which would allow him to top up his savings and have manageable monthly repayments.
His concerns were not unfounded, despite being gainfully employed within Kenya’s veterinary medicine sector, the contractual nature of his employment presented a challenge about accessing credit. It did not help matters that he embarked on his project in 2020 just when the COVID-19 outbreak had made formal financial institutions a lot more cautious when it comes to lending.
“Previously I used to borrow a little bit of money here and there from banks and the interest was a bit on the higher side at 13.4 per cent to about 14.0 per cent. The repayment period is what really strained me so much because where I work I am on renewable contract terms and so banks always restricted my repayment period to just three years. So, I could not borrow much money”, Kathoka says.
Kathoka approached his savings and credit cooperative for a mortgage to top up his savings, it is there that he was informed of Kenya Mortgage Refinance Company (KMRC) enabled facilities. He borrowed Ksh. 1.6 million with a seven years repayment period at 9.0 per cent per annum in interest rate. Kathoka says the terms of the KMRC enabled mortgage have allowed him much needed breathing space financially and a peace of mind.
“KMRC facility has really eased things for me. With the extended repayment period of seven years, I was now able to borrow a larger amount which enabled me to fast-track the construction. Having a place to call home allows me to handle other things because my family at the end of the day is protected. Even if you start a business and it collapses, at least you do not have huge monthly rent payment hanging over you”, he says.
According to Kathoka, the greatest impact of the KMRC enabled mortgage is that it has allowed him to elevate the quality of house he and his family reside in whilst paying monthly mortgage payments which equal his present rental cost. He says he now will not only have a home but also the space which will allow him to supplement his income and improve the life of his family.
“My monthly rent is Ksh. 25,000. My monthly mortgage payment is also Ksh. 25,000 although I top it up. The house I am constructing is a three bedroom in a self-compound whereas currently I live in a two bedroom which does not allow me the space and liberty to grow vegetable on the side and rear chicken. So, the construction is a big boost for me”, Kathoka says.
Kathoka says one of the main benefits of tapping into the KMRC enabled mortgage has been receiving hand holding from his sacco as far as disbursement and management of the mortgage proceeds goes.
“The funds are disbursed through my sacco in phases. After each phase, according to the bill of quantities they come for the site visit and ascertain that the funds are actually going into the construction and they then release funds for the next phase. This has really helped me to be on my toes. This has really helped me to fast-track the construction”, he says.