Procuring a mortgage needs not be a hassle any more, with a mortgage brokerage concept taking root in Kenya, writes Peter Muiruri

Many prospective home owners find themselves in treacherous grounds when looking for a suitable mortgage package, but the headache can now be addressed by independent mortgage brokerage firms such The Mortgage Company (TMC).

The company aims at fast-tracking transactions related to the financing of your new home.

The firm positions itself as a one stop shop for potential mortgagees in East Africa by taking on most of the legal and financial hurdles associated with procuring finances for a new home or intended real estate development. This leaves real estate developers with more time and energy to concentrate on their core business.

Apart from the mortgage buyer, the company will not only help developers acquire financing of new developments but also assist them sell their units by identifying prospective buyers and help them ones obtain mortgages at affordable rates.

The company charges one per cent of the value of the mortgage for its services.

Mortgage brokerage helps banks partnering with the brokerage firm to reap the benefits of dealing with prequalified customers who meet the financiers’ criteria.

Speaking to Home & Away during the just concluded 15th Kenya Homes Expo in Nairobi, TMC Managing Director Caroline Kariuki says the company provides that vital link between potential homeowners or developers and mortgage providers.

Kariuki has previously served as a divisional director of mortgages at KCB’s S&L.

"Mortgage requirements can be cumbersome for first time home owners hence the current little number of Kenyans on the mortgage portfolio. We assist our customers to come up with neat proposals that will be attractive to the lenders. We follow this up by linking the customer with the right financier," says Kariuki.

Time consuming

According to Kariuki, initial mortgage transactions and the acquisition of necessary statutory requirements including the profiles and current licenses of the professional team, Nema’s Environmental Impact Assessment (EIA) can take up to two years leaving both parties pressed for time.

By the time the process is through, interest rates will have shot through the roof. The brokerage firm intends to cut this period to a mere three months and save the customer some hard earned cash.

She says that Kenyans have little information with regard to mortgage procurement, a fact that has many made eligible homeowners shy away from mortgages.

"To many Kenyans, a mortgage is like a caged animal to be watched from a safe distance. Many have the mistaken notion that the mortgage sector is for a privileged few. This need not be the case as we can identify a package that fits well with one’s current financial ability. On the other hand, financiers need not worry as we work closely with credit reference bureaus to establish the credit risk of borrowers," says Kariuki.

With an educated public, Kariuki dares to dream of a situation where the mortgage takers’ portfolio will jump from the current 20, 000 to one million in five years.

"This is possible through the construction of low cost houses where even marriage partners can sign up a joint mortgage to accelerate the rate of repayment," she says.

Developers intending to put up such residential units can sleep easy as the brokerage firm shops around for the best lender in town or an eager capital partner for those unwilling to go into debt.

In such cases, TMC initially takes on an advisory role helping the developer come up with a well-structured proposal that financial institutions can find worthy and fund.

"Currently, developers will just put up buildings without doing enough market research to determine the suitability of the location, quality of building materials, choice of professionals to run the project or whether the units will be for sale or rental. Engaging professionals in this field can be the difference between a successful project and a flop," warns Kariuki.

In other cases, a person may have some land but no capital to develop it and yet does he want to go into debt. In such a scenario, TMC shops for an equity partner who injects the much-needed capital in exchange with a number of completed units.

Merging needs

"A person can have the cash with no concrete investment plan while the other one has some undeveloped property with no capital, yet both want to invest in whatever they have. Our job is to bring the two parties together and help them draw an agreeable partnership creating a win-win situation," says Kariuki.

Though mortgage brokerage concept may be new in the country, Kariuki says this is standard practice in many other places and cites the example of South Africa where over 70 per cent of mortgages are acquired through the assistance of brokerage firms.

The presence of mortgage brokerage firms in Kenya will also see banks restructure their packages and position themselves as the best suitors to potential home owners and developers.

Apart from local investors, TMC intends to tap the remittances from Kenyans in the Diaspora by identifying the best property investments that offer the best returns in preparation for a "good homecoming."

As Kariuki says, such Kenyans stand to gain in the long since dollar remittances attract lower interest rates.