Building Your Dream Home: How a KCB Residential (Construction) Mortgage Works

Building your dream home from scratch can be an incredibly rewarding experience. It allows you to customize every aspect of your living space to suit your unique needs, preferences, and style. However, the process of financing a construction project can be complex and overwhelming, especially for first-time homebuilders. That's where KCB's Residential (Construction) Mortgage comes in. If you already own a piece of land and are ready to start construction, a KCB Residential (Construction) Mortgage can provide the financial support you need. In this blog post, we'll explore how a KCB Residential (Construction) Mortgage works and guide you through the process of turning your dream home into a reality. But first...

What is a KCB Residential (Construction) Mortgage?

A KCB Residential (Construction) Mortgage is a type of loan designed specifically for individuals who want to build their homes on a piece of land they already own. It provides the necessary funds to cover the costs of constructing a residential property, including hiring contractors and buying materials.

Key features of a KCB Residential (Construction) Mortgage include:

• Loan amounts of up to 90% of the total project cost
• Flexible repayment terms of up to 25 years
• Competitive interest rates
• Staged disbursement of funds based on construction progress

How Does a KCB Residential (Construction) Mortgage differ from a Plot & Construction Mortgage? While both products are designed to finance the construction of a home, there is a key difference between a KCB Residential (Construction) Mortgage and a Plot & Construction Mortgage:

If you're looking to purchase land and build your dream home, consider exploring the KCB Plot & Construction Mortgage. Click here to learn more.

So, how do you go about getting a KCB Residential (Construction) Mortgage?

The process of obtaining a KCB Residential (Construction) Mortgage involves several steps:

Step 1: Determine Your Budget

Before applying for the mortgage, you need to have a clear idea of how much you can afford to spend on your project. This includes the cost of designing your home, hiring contractors, and buying materials.

To determine your budget:

• Use an online mortgage calculator to estimate your monthly payments based on your desired loan amount, interest rate, and loan tenure.
• Consider your income, expenses, and savings to ensure you can comfortably afford the mortgage payments and other associated costs.
• Get pre-qualified for a Residential (Construction) Mortgage to know how much you can borrow.

Step 2: Develop Your Building Plans

Seeing as you already have your land, work with a qualified architect or building designer to develop detailed plans for your dream home. These plans should include:

• Architectural drawings
• Structural designs
• Electrical and plumbing schematics
• Material specifications

Step 3: Obtain Necessary Approvals and Permits

Before you can start construction, you'll need to obtain various approvals and permits from local authorities, such as:

• Building permits
• Environmental impact assessments
• Land use approvals

Your architect or contractor can help you navigate this process and ensure that your project complies with all relevant regulations.

Step 4: Gather Required Documentation

To apply for a Residential (Construction) Mortgage, you'll need to provide a range of documents related to your project, including:

1. Approved building plans and structural drawings
2. Priced Bill of Quantities (BQs) duly signed
3. National Construction Authority (NCA) certificate
4. National Environment Management Authority (NEMA) approval of the Environmental Impact Assessment (EIA) or a letter of exemption
5. Comprehensive CVs, registration certificates, and profiles of your project team (architect, civil & structural engineers, contractor, quantity surveyor)
6. Appointment of a qualified project manager with relevant experience and credentials
7. Duly executed formal contract between the developer and the contractor
8. Contractor's all-risk insurance policy with KCB's interest noted
9. Performance bond from a reputable bank or insurance firm for 10% of the contract value

Step 5: Apply for Your KCB Residential (Construction) Mortgage

With your land, building plans, and approvals in place, you can now apply for your Residential (Construction) Mortgage. You'll need to provide various documents, such as:

• Proof of income (pay slips, tax returns, bank statements)
• Identification documents
• Title deed for your land
• Approved building plans and permits
• Detailed cost estimates and contracts

Our mortgage experts will review your application and guide you through the approval process.

Step 6: Begin Construction and Drawdown Funds

Once your Residential (Construction) Mortgage is approved, you can start building your dream home. The loan funds will be disbursed in stages based on the progress of construction. Typically, the disbursement stages include:

• Foundation completion
• Walls and roofing completion
• Electrical and plumbing installation
• Finishing and fixtures

At each stage, a KCB-appointed quantity surveyor will inspect the work and verify that it meets the required standards before releasing the next tranche of funds.

Step 7: Move In and Begin Repayment

After the construction is complete and you've received your occupancy certificate, you can move into your newly built dream home. Your Residential (Construction) Mortgage will then convert to a standard home loan, and you'll start making regular monthly repayments per the terms of your loan agreement.

Here Are Our Top Tips for a Successful Construction Project:

1. Plan ahead: Start planning your construction project well in advance to allow enough time for design, approvals, and financing.
2. Work with experienced professionals: Hire a reputable architect, contractor, and quantity surveyor to ensure the quality and timely completion of your project.
3. Communicate openly: Maintain clear communication with your building team and KCB throughout the construction process to avoid misunderstandings and delays.
4. Stay within budget: Keep a close eye on your expenses and make adjustments as necessary to avoid overspending.
5. Be patient: Building a home from scratch takes time, so be prepared for unexpected challenges and delays along the way.

Building your dream home is an exciting and challenging undertaking, but with a KCB Plot & Construction Mortgage, you can have the financial support and guidance you need to make it a reality. By following the steps outlined in this blog post, gathering the required documentation, and working closely with our dedicated mortgage team, you can navigate the construction process with confidence and bring your vision to life.

And there you have it folks. That is all we have for you in this episode, but we will be back with more mortgage gems that you do not want to miss.

Ready to take the next step? Contact KCB Mortgage through email at KCBKenyamortgages@kcbgroup.com or call us through 0711 087 000/0732 187 000.

Until next time…

Over and Out,

Witty Banker.