Investment financing in Kenya real estate

Property investments in Kenya have the potential to double and even triple in value per year – with the right property. So how does an investor finance a real estate investment? There are at least two main options in Kenya: group investments and mortgages.

Aside from being able to avoid risks like rising inflation, real estate investors can grow their net worth, enjoy high capital gains, and potentially see rapid rates of appreciation.

Financing options for real estate investments

1.Group Investments

This is the most efficient and most common financing option for the lower middle class and informal workers who cannot qualify for bank mortgages and loans due to their intermittent source of income.

Group investments, known locally as ‘Chamas’, hold assets in excess of Ksh80 billion in savings and investments in Kenya, with one in three adults being an active member of a group investment club. They are most successful with women, young people and the self-employed.

  • In order to function, members make daily, weekly or monthly contributions for a specific period of time and with a specific financial goal. Once the objectives are met, they identify a potential property, buy it and either start saving for development or split it equally among the group members.

  • Alternatively, banks form investment groups and invite interested parties to make monthly contributions. If the group member wants to buy a property, they simply borrow (at interest rates applicable) from the group based on their contribution. Group members co-sign the loans and bear the cost of repaying the loan if one of the group members defaults.

The success of group investing is strongly driven by a cultural impulse to pool funds to invest and borrow.

  • Most banking institutions and building societies in Kenya have recognized the potential of the option and have developed programs aimed at encouraging group investment – ​​it is based on the idea of ​​creating savings and investment opportunities.

2.Home loans and mortgages

The line between loans and mortgages in Kenya is thin and people often use the two terms interchangeably.

These are facilities offered by various financial and credit institutions such as banks and building societies to help you with your property purchase:

  • Loans and mortgages are granted to successful loan applicants who meet minimum loan qualification requirements.

  • Loans and mortgages can be financed in whole or in part by you. However, most lenders finance the property at 90%.

  • Different lenders have different interest rates and income generating loans charged at 15% interest rate per annum and discount development at 13% per annum

  • Properties for owner use can be financed up to 80%, while investment properties such as rental apartments or holiday homes can be financed up to 70%.

Loan and mortgage repayment times


  • 15 years for individual borrowers

  • 10 years for limited liability companies

  • 2 years per phase for real estate development

Additional costs

Most loan and mortgage applicants in Kenya are unaware of the hidden costs that come with taking out loans and mortgages.

  • stamp duty

Currently at 4% of real estate costs.

  • Evaluation Fees

Fees vary by appraiser and it is important that you have your own before the property is appraised.

  • court costs

Determined by the amount of the mortgage. Higher loan amounts mean higher legal fees. Banks have their preferred law firms to deal with, so make sure the lender tells you their preferred law firm.

  • Bank Facility Fees

Varies between banks and is intended to cover credit brokerage

  • Punish

fees for canceling the mortgage before the agreed date; varies between

  • property insurance

It is not compulsory and is paid annually. It protects the property during the loan repayment period.

  • Mortgage Life Insurance

Varies between lenders and covers your outstanding balance if you die.