ABOUT THIS GUIDE.

In selecting to pick up this written guide, you have indicated that you are ready to
make two important decisions, the first being taking a step towards home ownership
and the second being that you have chosen HOUSING FINANCE to work with you
on that journey. If it is not your first such investment, this guide serves to inform you
how HOUSING FINANCE works with you to ensure you are able to acquire the
property of your choice with a friendly partner by your side.

ABOUT HOUSING FINANCE.

HOUSING FINANCE, the largest mortgage finance company in Kenya, was

established in 1965 to promote thrift and home ownership by Kenyans and has been
a very active player in the in the development of shelter and financing of people
seeking home ownership. HOUSING FINANCE is a public quoted company (Nairobi
Stock Exchange) with more than 20,000 Kenyan shareholders. The shareholding is
split between CDC Capital Partners (24.9%), the public and institutional investors
(67.8%) and the government (7.3%). HOUSING FINANCE operates through several
locations, the corporate headquarters being in Nairobi at our Rehani House, and
branches spread out over the country in major urban areas. All locations are linked
by efficient and sophisticated computer technology to ensure we are able to provide
‘one-branch banking’ to all of our customers. You are therefore a customer of
HOUSING FINANCE, not a customer of a specific location of HOUSING FINANCE!
We have well trained staff in all of our service locations to ensure you get expedient
service wherever and whenever you call on us.

SO WHERE DOES HOME OWNERSHIP START?

In case you are a newcomer to the concept of borrowing, we will re-iterate that in
almost every situation where one seeks mortgage financing from an institution, you
will be required to put in some equity. This means that you will be financed up to a
portion of the value of your intended investments and you will need to finance the
rest. Savings therefore are an integral part of the process. At HOUSING FINANCE,
we have developed several savings products to start saving for the required down
payment. Please inquire from our customer service staff on the various products
available and we shall be pleased to advice you on which ones are suitable to you
given your circumstances. If you are ready with the required deposit, and you have
identified a property which you would like to purchase, please pick up a loan
application form from our counters, fill it, make available the requirements as spelled
out in the from and return it to us for processing.

WHO QUALIFIES TO BORROW FROM HOUSING FINANCE?

Any individual who seeks to purchase property in Kenya is eligible to apply. It is

imperative that the applicant is already qualified under the laws of Kenya to enter
into such a contract. As a general rule, HOUSING FINANCE will lend money to
applicants who can demonstrate that the loan will be fully repaid by their 65th
birthday. For people in employment and whose employment salaries is the major
basis of the borrower evaluation process, then the retirement age as specified by the
employer would be the date by which the loan would have to be fully repaid. Proof of
age for individuals and legal status for a company is a requirement.

WHAT TYPE OF LOAN CAN I GET?

HOUSING FINANCE offers a variety of mortgage loans. The most common is the
variable rate, equal payment (at any one prescribed rate) reducing balance mortgage
facility. The mortgage can be for the purchase or construction of a residential or
commercial property. Based on the specifics of any one application, we will be able
to confirm the type of facility available and the conditions applicable. Mortgage loans
repayment periods are normally quoted as a maximum. We currently extend loans
for upto 20 years max. but you can select a tenure that suits you.

CAN I GET A SECOND LOAN?

Based on the performance of the first, or existing, mortgage loan and so long as the
first mortgage has been conducted satisfactorily and ability, one is eligible to apply
for a second mortgage. Re-financing of an existing mortgage is also possible so long
as the applicant meets the conditions set.

GENERAL CONDITIONS FOR LOANS.

At HOUSING FINANCE, we appreciate that almost every borrower has

circumstances that are unique to them and we have adopted a policy of relative
flexibility. There are legal and regulatory requirements that we are required to comply
with necessitating the imposition of certain basic conditions to the issuance of loans
from HOUSING FINANCE.

1. Where a house is offered as a security, it must be a durable structure made of

materials acceptable to ourselves, insurers etc. and conform to the building
standards as published by relevant regulatory authorities.

2. The property must be properly registered and be capable of transfer,

assignment etc, to enable HOUSING FINANCE’ interests be legally
registered.

3. The applicant is required to maintain a savings account with HOUSING

FINANCE with a minimum balance equivalent to two month’s loan repayment
installment (subject to a minimum of Kes 10,000).

4. The loan amount granted will be based on the applicants assessed ability to
meet the scheduled installments to repay the loan. As a general rule,
HOUSING FINANCE will insist on additional loan conditions where an
applicant seeks to borrow in excess of 3 times their (the applicants) annual
gross income.

5. Any loan application to HOUSING FINANCE will be on our prescribed form

and completed to our satisfaction. Any incomplete applications will be
returned unprocessed to the applicant with no obligation on our part.
6. HOUSING FINANCE takes a first legal charge against the title/ownership
document of any security offered.

7. We finance upto 90% of the Mortgage Value of a property (or cost, whichever
is lower) as assessed by a professional valuer. It is important to note here that
a valuation of a property usually contains four distinct values; Open market (or
willing buyer/willing seller), Mortgage Value, Investment value and Forced
Sale value. The maximum amount to be financed on a loan is assessed and
advised per application. (See separate section on Valuation).

8. All loans are for properties located within municipal boundaries.

CONSTRUCTION LOANS.

Where an applicant seeks financing to build a property, the following additional

conditions apply.
‰ Provide a copy of the title.
‰ Provide building plans approved by the relevant local authority.
‰ Building specification from an architect.
‰ Survey plan of the property location.
‰ Copy of the contractor appointment specifying duration of construction
period, performance bonds/arrangements etc.
Based on the agreed loan amount, the balance of the construction costs will have to
be deposited with HOUSING FINANCE at the start of the loan. All disbursements will
be to the contractor against signed architects’ certificates and on a re-imbursement
basis.

PURCHASE OF PLOTS

The maximum loan to be considered for this will be 70% of the mortgage valuation or
cost, whichever is lower, subject to a maximum loan of Kes 1.5 Million repayable
over a maximum period of 5 years. The plots must be urban and not exceed 2 ½
acre in total size.

COMMERCIAL PROPERTIES.

Loans are available upto 70% of mortgage value or cost, whichever is lower.

WHAT INTEREST RATES CAN I EXPECT TO PAY?

The mortgage interest rates that are charged on outstanding loans are based on the
published rates as per the schedule of tariffs of the company. Information on these
rates is available at our counters. Interest is based on a reducing balance. The
scheduled equal repayments are computed on this basis and a repayment table is
made available to you whenever you complete an application, and also when final
disbursement of the loan is concluded. Whenever the repayments are changed as a
result of revised interest rates, a revised repayment schedule is available on request.
We have put into our web site a model repayment calculator that you can use to
compute various different scenarios based on different loan rates, tenures or
amounts. Please note that the repayment calculated by the web-site module does
not include the repayment amount of the insurance covers that require to be taken
on each mortgage loan. For this reason, you will note that the repayment amount
calculated by the model differs slightly from that advised by us. Always ensure that
you make your repayments based on the value advised by us,

DO I NEED TO HAVE A PROPERTY VALUATION?

It is a requirement that any property to be provided as security is subjected to a

professional valuation. We have an in-house valuation team and also list of
professional independent valuers who we contract to carry out valuation work on our
behalf. The fees for these services are uniform and comply with the Valuers Act.
Please note that valuation fees must be paid in advance to enable assessment of the
security alongside the loan application. These fees are not refundable if the valuation
has been conducted and the application is subsequently withdrawn or declined.
Please see our schedule of tariffs for details of the fees.
The valuation report will detail various aspects of the property and also give

WHAT OTHER COSTS CAN I EXPECT TO PAY?

Mortgage transactions will almost always require the services of a registered lawyer
and the payment of statutory fees where transfers, charges, and/or registrations
take place. Legal fees are stipulated in the Advocates Act. We have engaged the
services of some advocates who assist in the perfection of the security
documentation. The legal fees are payable directly to the advocate by the loan
applicant. The government imposes a stamp duty on the transfer or mortgage of a
property. The rates are as specified in the Finance Act prevailing at the time of
transfer. As a benchmark, the combined legal and stamp duties would work to
approx. 7-9% of the purchase price. These payments are made at the processing
stage (before our disbursement) of the loan. Subject to the maximum lending limits,
we are able to make some dispensation towards these costs should the borrower
wish to make an application.

WHAT INSURANCES DO I NEED?

HOUSING FINANCE undertakes to have two major insurance’s underwritten on the

all mortgage loans advanced;
‰ House owners policy (on security offered)
‰ Group mortgage protection (on borrowers life)

Details of these covers are available on request. The monthly repayment installment
advised by us will include the costs of having these covers available and current.
Because of the group mortgage protection, it will be necessary for all borrowers to
undertake a medical examination before the underwriter is able to confirm the
available cover and premium assessed.
HOW LONG WILL IT TAKE BEFORE I GET MY LOAN?

It is very apparent that the mortgage loan process includes internal (inside
HOUSING FINANCE) and external (outside HOUSING FINANCE) processes and
controls. The loan therefore goes through three stages in the sequence as internal Æ
external Æ internal. To elucidate;

Stage 1 (internal) - As long as we receive all properly completed application

materials, we will be able to communicate the fate of your application within 14 days.

Stage 2 (external) Applicant - The loan offer is sent to you and acceptance is
supposed to be received by us within a specified time. In addition to you making
good any conditions of the offer, we shall also expect you to go for your medical
examination and complete the legal processes with the assigned lawyers.

Stage 3 (external) Applicant and Lawyers-The lawyers present the titles to the
government for evaluation and payment of statutory fees (stamp duty) and
registration. This registration process will normally take approx. one and a half
months if the property titles and legal documents are okay. Titles with endorsed
conditions can extend the time taken to complete this process.

Stage 4 (internal) – Once we receive back from the lawyers properly executed
documents and legal charges to the title, we make the disbursement as specified in
the sale arrangements. We will deliver disbursement of the loan within 14 days of all
conditions of the offer having been fully executed.

CAN ONE GET A GROUP SCHEME?

Yes. The most common group scheme is the employer sponsored. Other groupings,
like SACCO’s are also available. The common intention of a group scheme is to
seek subsidized borrowing rates by financing a portion or the entire loan for
members of the group. Depending on the extent of financing and other scheme
rules, HOUSING FINANCE can range from mere administrators of the scheme to
being lenders of risk. It follows then that the group defines its own rules (subject to
the inclusion of legal obligations under the laws of Kenya), and we facilitate the
mortgage facility depending on what involvement the scheme wants us to take.

The scheme would need to finance a part or all of the capital for the loans to be able
to extend a subsidy. We would pay a return on those funds as long as they are with
us and retain an interest margin to cover the risks and administration costs. The
return paid on the funds forms the basis of calculating what rate is payable by the
members borrowing of the scheme.

SO HOW DO I GET STARTED?

Come and see us at HOUSING FINANCE. Your savings and investment horizons
are a very important aspect of you daily planning. It is evident that these two
horizons move through time with peaks and dips. But they do exist for a commonly
defined period of your life. Start savings now and turn your savings into an
investment for you and your loved ones. Listed on this brochure are the various
locations where you can find us (including on the World Wide Web). Make that
important step by coming to see us at HOUSING FINANCE and turn your dream into
a home!

MORTGAGE FINANCING NON-RESIDENT KENYANS

We generally finance up to 90% of the property value, with a repayment term of up to

20 years.

To be able to put in your loan application, we would require the following:

• 3 months latest pay slips
• 6 months latest bank statements (of foreign account)
• Copy of your passport
• Copy of work permit / residency permit
• Employment contract
• Letter of introduction from employer covering: designation, income, retirement
age, terms of employment (contract/permanent) and allowances.
• Registered power of attorney
• Fill in application form

If you have already identified your property of choice, kindly provide:

• Sale agreement / draft
• Sale agreement / letter of offer
• Copy of title
• Payment of valuation fees as will be advised

Once we receive the above, we will be able to start processing your application and
update you on the approval status (I.e. if your loan is approved or otherwise).

Please note additional costs / amounts (Commitment fee, Stamp Duty, Legal fees
and amounts required in savings account) required during the transactions which
range between 7-9% of the property value.

We look forward to hearing from you!

For more information / clarification, please feel free to contact:

diaspora@housing.co.ke