Friday, August 12, 2011

Kenya's first unsecured housing loan launched


By MORRIS ARON

Middle income earners who have previously been locked out of owning a house through mortgage loanscan now breathe a sigh of relief.
This follows the entry of a micro-lender offering unsecured housing loans.
The firm – Select Management Services – which is part of the investment firm African Alliance is set to offer micro-loans specifically for the purpose of buying a plot and building a house.
"We have broken down the stages of owning a house to make it more affordable for this income group that for a long time has been left out of home ownership," said Paul Kihiu, the chief executive officer of Select Management Services.
Under the arrangement with their product called Ujenzi loan, civil servants, members of the Teachers Service Commission and employees of a number of approved companies will get loans in five phases each a maximum of Sh500, 000 on a check-off basis for a maximum period of 24 months in order to build a house.
The stages where the loans will be approved are modelled on the typical Kenyan way of building a house where one first acquires a plot, then lays the foundation, builds a structure, moves in, then completes the rest of the house in stages depending on the level of his or her income.
Binding contract
The select model of micro-lending will also see an individual maintain the property ownership in their own name as opposed to the current arrangement where a property is normally owned by a financial institution till all the loan is cleared.
In return, the Select Management Services will rely on the binding contract between the employee and the employer and the check-off system for monthly deductions as per the terms and conditions of the loan for its payments in off-setting the loan.
The entry of the company marks Kenya’s first unsecured housing loan facility.
The company is operational in eight African countries with Botswana so far the biggest beneficiary of their services.

2 comments:

  1. Am excited that at last some of us can now own homes. However, you need to think of a product for employees who already own pieces of land but only need the money for building.At the same time their payslip is over committed but needs a grace period to build and then move into the house and begin to repay the loan immediately.
    Tush, Kisumu

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