Co-op Bank Partners with Enwealth to Launch Kenya’s First Pension-Backed Mortgage
- The two institutions have jointly launched a Pension-backed Mortgage loan facility for members of pension schemes through the collaboration
- The facility will also enjoy an extended repayment period of up to 20 years, subject to the retirement age of the borrower
- The application can be done by an individual pension scheme member or jointly with a spouse, thereby consolidating their pension benefits to access a higher amount
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The Co-operative Bank of Kenya has received a major boost after entering into a partnership with Enwealth Financial Services Limited.
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The two institutions have jointly launched a Pension-backed Mortgage loan facility for members of pension schemes through the collaboration.
Qualifying for a mortgage
In a statement, the organisations said that the new facility is expected to enable the over three million pension schemes in Kenya, which otherwise would have found it difficult to raise enough funds to buy a home, to qualify for a mortgage.
In addition, the facility will enjoy an extended repayment period of up to 20 years, subject to the retirement age of the borrower.
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TUKO.co.ke understands that 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% of their accrued pension benefits as down-payment to buy a home.
This facility is targeted at pension scheme members whose 40% of their pension benefits cannot cover the full cost of buying a house.
Pension scheme member
A member will approach the Bank to access a credit facility to cover the difference in those circumstances.
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With this facility, a pension scheme member can purchase a developed property anywhere in Kenya with a ready title deed or certificate of a lease, provided that the house is a residential property for the member’s own occupation.
The application can be done by an individual pension scheme member or jointly with a spouse, thereby consolidating their pension benefits to access a higher amount.
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Speaking during the launch event held at the Co-op Bank Property Hub in Nairobi, the Director Corporate Institutional Banking at Co-op Bank, Jacqueline Waithaka, lauded the partnership between Co-op Bank and Enwealth Financial Services that brought about the new homeownership solution.
“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,” said Waithaka.
Financial well-being and dignity
At the same time, the Chief Executive Officer (CEO) of Enwealth Financial Services, Simon Wafubwa, said that owning a home and having an adequate income at the point of retirement are the most critical pillars for a lifetime of financial well-being and dignity.
''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 Wafubwa.
Additionally, the Chairman of Enwealth, Peter Waiyaki, reiterated the need for innovative social security financial products that are responsive to the needs of times to achieve economic resilience.
“The pessimist may complain about the wind while the optimist would expect it to change, but the leader adjusts the sails through strategic synergies. This partnership between Enwealth and Co-op Bank seeks to adjust the sails for the mortgage landscape in the country,'' Waiyaki said.
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Source: TUKO.co.ke
