MWALIMU AFFORDABLE HOUSING MORTGAGE PRODUCT

Introduction              

Mwalimu National Sacco has partnered with the state corporation Kenya Mortgage Refinance Company Ltd as a primary mortgage lender, to offer affordable housing loans to our Sacco membership at a competitive pricing of single digit.

1. MWALIMU MAKAO

A product designed for individuals buying their first home (Mwalimu Makao).
This is in reference to purchase of a residential property for occupation or rental purposes. The minimum term for this loan is 1 year and a maximum of 25 years subject to official retirement age of the applicant (member).

Key features:

• Minimum amount is Kshs. 500,000.00 and Max KShs.8,000,000.
• Maximum loan one can apply is annual income times three subject payslip ability.
• Mortgage protection cover is available.
• Outstanding lease should be at least 40 years at initiation of loan
• Interest rate is fixed for the entire term of the mortgage currently at 9% per annum on reducing balance.
• Negotiation/loan processing fee is 1% (an average 1% for the industry).

1. UJENZI LOAN

A product designed for members who are out to build (Ujenzi loan).
Such construction could either be of a residential property for occupation or rental purposes.

Key features:

• Minimum term for the loan is 1 year and maximum is 25 years subject to official retirement age of the member.
• Minimum Amount Kshs. 500, 000.00and a Maximum of Kshs. 8,000,000.
• Maximum amount is a member’s annual income times three subject pay slip ability.
• Mortgage protection cover is available.
• Outstanding lease should be at least 40 years at initiation of loan
• Interest rate is fixed for the entire term of the mortgage (at 9%per annum on reducing balance)
• Negotiation/processing fee is 1% (an average 1% for the industry)

Note:For construction loans, the Original or where applicable certified true copies of the following will be required: –

• Approved bill of quantity (BQ) by a qualified and duly licensed quantity surveyor as required.
• Approved building plans by relevant authorities.
• NEMA & NCA approval as may be required.
• A copy of title/lease or other form of title for affordable housing and official search report for the property being developed.
• Current receipts for payment of land rates and rent, if applicable.
• Surveyors report confirming location and identity of property
• Applicable insurance

 

1. RE-MORTGAGES

This offers our members convenience of buying out their mortgage loans with other commercial lenders to MNS at the prevailing competitive mortgage pricing.
Key features:

• Minimum term for the loan is 1 year and Maximum of Maximum 25 years subject to official retirement age
• Minimum Kshs. 500,000.00 and Maximum Kes8,000,000.
• Outstanding lease should be at least 40 years at loan initiation.
• Interest rate is variable or fixed depending on the PML currently at 9% per annum on reducing balance.
• Negotiation fees dependent on the PML.

COMMON AFFORDABLE HOUSING PRODUCT FEATURES:

These features are common to all KMRC approved mortgage products:

1. Acceptable property for security is subject to marketability assessment by the Primary Mortgage Lenders (PML)
2. Outstanding lease should be at least 40 years at loan initiation
3. A 50% Debt Service Ratio* or 35% of gross income whichever is lower
4. Maximum loan amount determined by 30% of monthly income for informal sector borrowers
5. Maximum loan amount determined by:

1. 1. Market property at 3-times annual income subject to serviceability for salaried borrowers and Debt Service Ratio
   2. Affordable Housing (category) for up to Ksh8 million

1. Mortgage Insurance – credit life insurance and property insurance against fire and other perils

PROPOSED ASSET FINANCING PRODUCT& INSURANCE PREMIUM FINANCING.

PURPOSE AND CONTENT

The Product ensures that our members can access credit facilities to acquire assets such as  motor vehicles, school buses, construction equipment, industrial equipment etc. For their business and personal use. This is a self-securing loan product for the financing of moveable assets.

It offers great flexibility and helps applicants’ free up cash by enabling them to acquire assets with minimum fuss. This is as a way of value addition and affording our members financial solutions to meet their diverse needs.

JUSTIFICATION

1. The proposed financing solution will assist as cater for the diverse needs of our members by availing them an affordable solution.
2. The proposed product will aid the Sacco lock in members and retain existing members from by offering them a solution and thus they do not have to look for this solution from the competition.

KEY FEATURES

1.     ASSET FINANCING LOAN

	Asset Financing Loan Features
Product (Design)	·        Brand name: o   Asset Financing Loan ·       Receive up to 80% financing for brand new vehicles. ·       Loan repayment period of up to 4 years for brand new vehicles ·       Up to 70% financing for used commercial / personal vehicles. ·       Loan repayment period of up to 3 years for used commercial / personal vehicles. ·       Up to 60 % financing for used PSV vehicles. ·       Loan repayment period of up to 2 years for used PSV vehicles. ·       Minimum monthly income for eligibility – KES 10,000 ·       Low minimum loan amount ·       No maximum loan requirement ·       Insurance for vehicles / equipment will remain comprehensive for the period the asset is under finance unless exceptions are sought. ·        Repayment period from 1 to 5 years ·        Disbursement in cheque/RTGS in favor of the dealer/Vehicle vendor ·        Security – Asset comprehensively insured through MNS RIB Ltd o   Asset documents lodged with the SACCO’s lending department. o   Assured Insured
Positioning	Stress free 3600 asset financing
Physical Evidence	·        Membership ·        Loan Agreement Form. ·        Letter of offer ·        Loan schedule
Process	·        Loan advise by Business loan officer. ·        Member complete application form alongside proforma invoice/valuation report/sale agreement and submit to Business loan officer. ·        Appraisal, Recommendation by Branch Business loan officer. ·        Disbursement within time stipulated by the service charter. ·        Repayment through the member’s Biashara account ·        Remedial actions in case of default ·        Operational processes as per the operations schedule
Price	·        2% Loan appraisal fee (one-off) ·        2% insurance fee (one-off) ·        Interest rate at 15 % yearly reducing balance basis. ·        Pricing as per the tariffs schedule
Place	·        Product available across all Mwalimu Sacco branches ·        Use of Pay bill, Agency banking or FOSA Branches for loan repayment. ·        Make deposits or repayments using e-banking services e.g. M-Pesa, Internet banking
People	·        Excellent customer service to members ·        Develop and maintain excellent interpersonal relationships with the members. ·        Excellent professional financial service to members ·        Adhere to staff code of conduct that lays special emphasis on integrity and knowledge of products offered by the SACCO.
Promotion	Mwalimu National Sacco uses the following means of communication to promote the product: ·        Direct marketing by staff at the FOSA Branches and Agency outlets. ·        Marketing the product using print and electronic media. ·        Other marketing done during Marketing days and member Education days. Sample marketing activities may include. ·        Brochures, posters, flyers ·        Display items i.e. the partners’ materials
Terms & Conditions	·        The asset being financed shall be jointly registered between Mwalimu National Sacco and the Borrowing Member before loan disbursement. ·        Where the Member is borrowing asset finance to invest in commercial business, the member must demonstrate experience of having been in that line of business and provide proof of; – 1.      Ownership of a fleet of not less than 2 assets which one of them must be debt free. 2.      Repayment track record. ·        All assets financed by the Sacco shall always be comprehensively insured through MNS RIB Ltd during the loan term and MNS Interest noted as “Financier/First loss payee.” ·        All movable assets financed by MNS shall always be installed with GPRS tracking device by a tracking company in Mwalimu National Sacco Panel. ·        Vehicle valuation for used or imported vehicles will be undertaken at Members cost. ·        Costs associated with Insurance, Valuation and Installation of car tracking devices will be borne by the borrowing member.
Exclusions	·        The Sacco will not finance start-ups in Business. ·        The Sacco will not finance luxury vehicles and vehicles deemed to depreciate or lose value faster.

ASSET FINANCING SCHEDULE-FINANCING OPTIONS

ASSET TYPE	ASSET CONDITION	MEMBER TO FINANCE	MAX REPAYMENT PERIOD
Private/Saloon Cars	New	20%	5 yrs
	Used*	30%	4 yrs
Commercial Vehicles (Prime movers, trucks, pickups, Vans)	New	20 %	4 yrs
	Used	30%	4 yrs
School Buses	New	15%	4 yrs
PSV Vehicles (Tour Vans, Taxis, Hires)	New	30%	3 yrs
	Used	40%	3 yrs
PSV Matatu and Buses	Used	40%	2 yrs
	New	45%	3 yrs
Motorbikes	New	30%	1 yr
Trailers	New	30%	4 yrs
Tractors and related agricultural implements	New Used	30%	4 yrs
Office Equipment’s (Computers, Printers, Servers,)	New	40%	3 yrs
Industrial Equipment (Plant and Machinery)	New/Used	40%	3 yrs
Contractor Equipment/ Earth Movers	New Used	30% 35%	4 yrs 3 yrs
Specialized Equipment’s – Medical, Lab	New Used	40% 50%

 

REQUIREMENTS

1. Individuals
   1. Fill loan application form
   2. Copy of Identification document
   3. Copy of KRA PIN Certificate
   4. Pro forma invoice/sale agreement of asset being financed.
   5. Six months Bank statement duly certified

SUPPORTING DOCUMENTS:

1. Sales agreement/Proforma invoice for asset being financed.
2. Copy of Logbook for used assets.
3. Latest 3-month payslips
4. Contracts being serviced if any for commercial assets.

Other features:

• Insurance premiums financing shall be arranged through MNS Risk and Insurance Brokers Ltd.

2.     INSURANCE PREMIUM FINANCING

Insurance premium finance is a finance facility that allows an insured to spread an insurance premium payment over the term of the policy rather than paying the full premium up front. The insurance premium finance company, as lender, advances premium payment on behalf of the insured.

	Insurance Premium Financing Loan product features
Product (Design)	·        Brand name o   Insurance Premium Financing ·        Loan to acquire Insurance Premiums for all needs and other fees e.g. Motorcycles, Motor car, Machineries, properties, domestic animals and business stock, crop, green house. ·        Loan Term of Up to 10 months. ·        Flexible repayment arrangement. ·        Disbursement in cheque drawn in favor of the insurance company. ·        Cover will be through MNS Risk and Insurance brokers Ltd. ·        Security – a.      Asset documents lodged with the SACCO. b.      The comprehensive cover c.      The borrower to meet 10% of the total premium before signing of the IPF application and agreement form. d.      2 Guarantors e.      Confirmation of Asset bought or being insured
Positioning	·        Affordable insurance cover for all your needs.
Physical Evidence	·        Cover- the Insurance certificate. ·        Insurance Agreement Form. ·        Letter of offer. ·        IPF Loan form ·        Loan repayment schedule
Process	·        To be available strictly to Sacco Members Only. ·        Fill a premium finance form. ·        Appraisal by the business loan officer and confirmation of ability to repay. ·        Approval based on ability to pay and adherence to lending criteria. ·        Disbursement by way of cheques drawn in favor of MNS Risk & Insurance Brokers Ltd. ·        MNS Interest in all insured assets to be noted as “Financier/First loss payee” ·        Monitoring- The cover to stand cancelled on the Fifth day after installment is defaulted, any payments from the insurer to the insured is channeled through Mwalimu National Sacco FOSA account. ·        Operational processes as per the operations manual.
Price	·        Interest rate at 10% flat rate ·        Default Management: Ø  The cover is cancelled as soon as the insured does not respond to 1st notice within 30 days. Ø  Pricing as per the tariffs schedule
Promotion	MNS uses the following means of communication to promote the product: ·        Direct marketing by staff at the customer care desk and off-site ·        Marketing the product using print and electronic media ·        Social media ·        Other marketing done during field days and member information days.

Benefits to the Sacco

1. Afford our members a long-term financing solution to enable them acquire motor assets and other business assets.
2. A strategy to retain our members in the long term and lock them out from seeking financing from other lenders.