Knowledge Base




A Guide to Diaspora Mortgages in Kenya 1

By Cytonn Diaspora     Tags :  

Diaspora mortgages provide an affordable way to invest in property at home. Coupled with steady rental income, they have the potential to reduce the carrying cost of your investment property in Kenya.

Learn how you can benefit from a Diaspora mortgage with our guide.

What is a mortgage?
  • A mortgage is a loan extended for a specified period. Borrowers commonly make a single monthly payment that is part principal repayment and part interest payment. A mortgage is typically secured by the home with which its purchased.
  • A mortgage is also an amortizing loan. Successive payments reduce the principal and interest amounts outstanding. Each payment also builds your equity (ownership share) in the home until it is completely paid off.
  • Some lenders also extend a second loan against the equity/ ownership share in your home. This second loan is called an equity release or a home equity line of credit
  • Lenders may also prefer to issue mortgages under fixed rates or floating rates where the mortgage rate fluctuates with market interest rates

Important terms

Loan to Value (LTV): This is how much the bank is willing to lend you against the value of the home. The LTV is expressed as a percentage of the value of the home being purchased

Why is a mortgage compelling?

  • Affordability: Own a property for a little at a time; mortgage payments can also be offset with rental income
  • Enjoy capital appreciation by locking in the price of a unit when it is low. Reserving a unit when a project is selling on an off-plan basis allows you to lock-in a low price so you benefit from price appreciation
  • Tax benefits: The interest paid on a mortgage can reduce the amount of income tax paid by the borrower