Co-operative bank- Enwealth launch a pension-based mortgage loan facility

By The Weekly Vision

Kenya’s top lender Co-operative Bank has introduced another major innovation, partnering with Enwealth Financial Services Limited, to launch a Pension-backed Mortgage loan facility for members of pension schemes. This is the first scheme of its kind in East and Central Africa.

The new facility is expected to enable over 3 million members of pension schemes in Kenya, who otherwise would have found it difficult to raise enough funds to buy a home, to qualify for a mortgage. The facility will enjoy an extended repayment period of up to 20 years, subject to the borrower’s retirement age.

This facility is targeted at pension scheme members whose 40% of their pension benefits cannot cover the full cost of buying a house. A member will approach the Bank to access a credit facility to cover the difference in those circumstances

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. A member will approach the Bank to access a credit facility to cover the difference in those circumstances. With this facility, a pension scheme member can purchase a developed property anywhere in Kenya with a ready title deed or certificate of the lease, provided that the house is a residential property for the member’s 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. Speaking during the launch event held at the Co-op Bank Property Hub, the Director Corporate Institutional Banking at Co-op Bank, Mrs Jacqueline Waithaka, lauded the partnership between Co-op Bank and Enwealth Financial Services that brought about the new homeownership solution, adding, “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.” Speaking at the launch, the Chief Executive Enwealth Financial Services Mr Simon Wafubwa said, “Owning a home and having an adequate income at the point of retirement are 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.”

Additionally, the Chairman of Enwealth Mr Peter Waiyaki reiterated the need for innovative social security financial products that are responsive to the needs of times as a way of achieving economic resilience, noting, “The pessimist may complain about the wind while the optimist would expect it to change but through strategic synergies, the leader adjusts the sails.

“This partnership between Enwealth and Co-op Bank seeks to adjust the sails for the mortgage landscape in the country.”

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