Co-op Bank unveils first pension-backed mortgage in market
Co-operative Bank of Kenya has tapped Enwealth Financial Services Ltd to launch a mortgage facility which will see customers own homes through pension contributions.
The facility which targets close to three million members of pension schemes will eye those whose pension benefits cannot cover the full cost of buying a house.
However, the deal comes with a loan which has an extended repayment period of up to 20 years, subject to the retirement age of the borrower. Speaking yesterday during the launch of the facility at the Co-op Bank Property Hub, Jacqueline Waithaka, Director Corporate Institutional Banking at Co-op Bank said the partnership opens a new chapter in home ownership.
“This product is a deliberate response by the bank in support of the Government’s affordable housing pillar of the Big Four Agenda.
We are excited to pioneer this innovation that will enable a wider pool of Kenyans to realize their dream of owning a home,” she said.
“We are excited to partner with Co-op Bank to make available this innovative home-ownership solution that gives our clients access to affordable mortgages in line with the new Retirement Benefits regulations,” said Enwealth Financial Services CEO Simon Wafubwa.
The new mortgage is the first such facility in the market, and has been made possible by the recent changes to the law, specifically the Retirement Benefits (Mortgage Loans) Act, Regulations Amendment 2020 that now allows members of pension schemes to utilise up to 40 per cent of their accrued pension benefits as down-payment to buy a home.
Pension scheme members can purchase a developed property anywhere in Kenya as long as it comes with a ready title deed or certificate of lease, and the house is a residential property for the member’s own occupation.