Housing Finance in partnership deal with pension fund

By Morris Aron

Mortgage financier, Housing Finance, has signed Kenya’s first pension mortgage agreement with Local Authorities Pension Fund (LAPTRUST), which will enable the fund’s members use their pension to access mortgages.

LAPTRUST becomes the first major pension fund to take advantage of the amendment of the Retirement Benefits Authority Act, which now allows members of a pension scheme to use 60 per cent of their savings as collateral when taking a mortgage.

"The Local Authorities Pension Fund benefit due to an employee can be used as security against the loan, without eroding the retirement benefit," said Frank Ireri, managing director of HF.

No disinvestment

The pension mortgage solution will ensure there is no disinvestment out of the fund, with assets remaining intact while earning interest.

Borrowers’ monthly repayments will be made through salary deductions.

The guarantee enables the mortgage firm to loan closing costs in the form of upfront deposit, stamp duty, valuation fees and legal fees, in addition to the full open market value of the property one is purchasing.

"Housing Finance is now in a position to provide over 100 per cent financing in Home Freedom," said Ireri.

LAPTRUST Managing Trustee, Hosea Kili, said the partnership will spearhead the development of suitable tailor made mortgage finance products and property solutions for LAPTRUST members, and stakeholders.

"We have plans to deepen the partnership with Housing Finance, for the benefit of LAPTRUST members and stakeholders," said Kili.

LAPTRUST has a total of 24,000 members drawn from over 175 local authorities, as well as 60 water and sewerage companies, spread across the country. The Trust’s estimated value stands at approximately Sh7 billion.