Pesa Mashinani: Mortgage Loan for Kenya Civil Servants

Have you ever dreamt of having a good house with 2 bedrooms or 3 bedrooms or 4bedrooms? A house with a modern Kitchen and a spacious sitting room? A house that has a beautiful verandah and balcony?

Here is your chance to own and live in a state-of-the art house. Now you can own a Bungalow! Now you can own a mansion! Now you can live!

The salaries and Remuneration Commission (SRC) has approved new rates of Mortgage loans for Kenya civil servants. Civil servants in all job groups are entitled to get a home loan.

The new Kenya civil servants home loans are affordable. The repayment period is long enough for you to service the loan without tears..

The mortgage loan interest rate is substantially low compared to the current mortgage interest rates in the Kenyan market.

The current interest rates of mortgage loans in Kenya stand at 16.5% on average. The lowest mortgage interest rate in Kenya is offered by the Standard Chartered Bank. In July last year, the Standard Chartered bank recorded the lowest interest rates in Kenya at 10.2%. The bank that offers the next lowest lending rates on home loans after Standard Chartered bank is the Kenya Commercial Bank (KCB).

Civil servants home loan Key details

· Home loan interest rate: As earlier stated, the home loans for civil servants are cheap due to the interest rate. The interest rate is only 3% per annum. This interest rate is five times lower than the current mortgage interest rates in the Kenya market.

Mortgage loan per job group

Let’s now look at the mortgage loan per different job groups in the civil service. We will start with the lowest job group going up.

Mortgage loan for job group A, B, C, D, E and F

The maximum home loan for civil servants in Job group A, B, C, D and F is four million Kenya Shillings (KShs. 4,000,000).

What to do with Ksh. 4,000,000 home loan?

Well, with KShs. 4,000,000 home loan you can;

Let’s focus on buying a house. If you are in Nairobi, you can buy a well-furnished 2 bedroom house in the middle-income estates. The average cost of a 2 bedroom house in the middle-income estates is KSHs. 4,000,000. The price for a two bedroom house in Nairobi ranges from Ksh. 3.5 million and KShs. 5.6 million in the middle-income estates.

If you opt to buy a 2 bedroom house in Nairobi for Kshs. 4,000,000 and then you rent it out, you will earn a rent of about KSH. 21,000 per month.

In other towns, you may get a 3 bedroom house with your four million Shillings home loan.

Now let’s focus on buying land.

With Kshs 4,000,000 loan, we advise you to keep away from Nairobi. Investing that money in other areas in Kenya will give you better returns in the long run. Why is this so?

· The lower cost of land in other parts of Kenya will secure you a bigger piece of land. In areas where an acre of land goes for Ksh. 500,000, you will secure 8 acres of land.

Mortgage loan for job group G, H and J

The home loan for job group G, Job group H and Job group J is six million Kenya shillings (KSHs. 6,000,000).

This is a very good price for a good house in Nairobi. With six million shillings, you will comfortably secure a 2 bedroom house in middle-income estates in Nairobi without much bargaining.

A six million loan can secure you 10 acres of land in the Mashinani. The choice is yours. Do you want a two bed room house in Nairobi or a ten acre land in Mashinani plus a small house?

Mortgage loan for job group K, L, M and N

Now money matters are getting very significant from this level onwards. The fresh graduate who has been employed recently by the Public Service Commission will be smiling at the end of this. Please forget about HELB loan for a moment.

Civil servants in Job group K are entitled to a home loan of ten million Kenya Shillings (KShs. 10,000,000). Civil servants in Job group L, M and N are also entitled to a similar amount.

What to do with 10 million home loan?

The options are just three.

Let’s focus on starting a real estate business. Of course our advice is always that you keep away from Nairobi. Do you know that the demand for rental houses in all other parts of Kenya (Excluding Nairobi) is 300,000 houses per year? The established musketeers in the real estate sector cannot supply enough housing units to meet this demand. Therefore, many opportunities are there for you to tap into. Now, let’s not go deep into how to start a real estate company in Kenya. That’s a topic for tomorrow. However, we will like to remind you that you need to keep the construction cost at a minimum without compromising on the construction standards. On average, the cost of constructing a storey building does not exceed KShs. 1,000,000 per floor in several parts of Kenya.

Fig: A chart showing of the maximum home loans for civil servants per job group.

Mortgage loan for job group P, Q, and R

You can actually establish a small ranch given the mortgage loan for civil servants in job group P, Q and R. Civil servants in Job group P, R and R are entitled to a maximum home loan of fifteen million Kenya Shillings. (KShs. 15,000,000).

With the maximum home loan of KShs. 15 million, you are guaranteed of concurring Mashinani. You will acquire a large piece of land and still remain with sufficient money to build a bungalow.

If you are business minded then you can think of acquiring land for establishing a real estate business in a major town in Kenya. Think of towns like Nyeri, Kakamega, Garissa, Busia, Naivasha, Nakuru, Eldoret, Migori, Kisii, Mwingi, Nanyuki and Isiolo among others. Always try to invest closer to your home area for logistical reasons.

Mortgage loan for job group S, T, and U

These are the exclusive job groups in Public Service. The maximum mortgage loan for civil servants in job group S, T and U is enough to make one a super millionaire and a real estate mogul.

Civil servants in job group S, T and U are entitled to a maximum home loan of twenty million Kenya Shillings (KSHs. 20,000,000).

Brief commentary

It is important not to look down upon the business potential of any given town (even the small centres in Kenya). This is exclusively for those civil servants who may wish to invest in real estate. Our advice is that you examine a town adequately before dismissing its real estate potential. Know how much money you can tap from that town or centre through rental houses or rental shops.