Buying Land and Building Your Dream Home: How a KCB Plot & Construction Mortgage Can Help

For many aspiring homeowners, the ultimate dream is to buy a piece of land and build a home tailored to their unique needs and preferences. However, the process of acquiring land and constructing a home simultaneously can be complex and financially challenging. Fortunately, KCB offers a Plot & Construction Mortgage, a comprehensive solution designed to help you finance both the purchase of land and the construction of your dream home. In this blog post, we'll explore how a KCB Plot & Construction Mortgage works and guide you through the process of turning your homeownership dreams into a reality. But first...

What is a KCB Plot & Construction Mortgage?

A KCB Plot & Construction Mortgage is a type of loan that allows you to finance both the purchase of a piece of land (not exceeding 2 acres) and the construction of a residential unit on that land within 6 months of acquisition. This all-in-one solution simplifies the process of buying land and building your home, providing you with the financial support you need at every stage.

Key features of the KCB Plot & Construction Mortgage include:

• Maximum loan-to-value ratio of 90% of the total cost (land purchase price/valuation + construction cost)
• Loan tenure of up to 25 years, depending on the type of property (commercial or residential)
• Competitive interest rates and flexible repayment terms
• Staged disbursement of funds for both land purchase and construction progress

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

If you already own a piece of land and are looking to finance the construction of your home, consider exploring the KCB Residential (Construction) Mortgage. Click here to learn more.

So, how does a KCB Plot & Construction Mortgage work?

The process of obtaining a KCB Plot & Construction Mortgage involves several steps:

Step 1: Determine Your Budget

Before applying for a Plot & Construction Mortgage, you need to have a clear idea of how much you can afford to spend on your project. This includes the cost of purchasing land, 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 KCB Construction Mortgage to know how much you can borrow.

Step 2: Acquire Land and Develop Your Building Plans

You’ll need to purchase a suitable plot of land for your construction project. Once you 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 KCB Plot & Construction Mortgage, you'll need to provide a range of documents related to your project, including:

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

Step 5: Apply for Your KCB Plot & Construction Mortgage

With your land, building plans, approvals, and required documentation in place, you can now apply for your KCB Plot & Construction Mortgage. Our mortgage experts will review your application and guide you through the approval process.

Step 6: Begin Construction and Drawdown Funds

Once your KCB Plot & 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, as verified by a KCB-appointed quantity surveyor.

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 KCB Plot & 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 Expert Tips for Buying Land and Building Your Home

1. Conduct thorough due diligence on the land before purchasing, including checking for encumbrances, land use restrictions, and accessibility to utilities.
2. Work with a reputable architect or building designer to create a plan that meets your needs, budget, and building regulations.
3. Choose experienced and licensed contractors, suppliers, and professionals to ensure the quality and timely completion of your project.
4. Maintain a contingency fund to cover unexpected expenses and changes during the construction process.
5. Stay actively involved in the construction process, regularly communicating with your team and monitoring progress to ensure your vision is being realized.

Buying land and building your dream home is a significant milestone that requires careful planning, financial resources, and expert support. With KCB's range of mortgage solutions, including the Plot Loan, Residential (Construction) Mortgage, and Plot & Construction Mortgage, you can access the financing you need at every stage of your journey.

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.