Buying a home through a Sacco

UNLOCKING THE ADVANTAGES OF NAVIGATING

THE HOME BUYING PROCESS THROUGH A SACCO

Article by: Shem Nyachio

Date: Friday, 22^nd March 2024

Owning a home is becoming increasingly vital and, a dream come true to many Kenyans, yet for a large portion of the population it just remains that-a dream. In every hurdle, there is a solution and in owning a home, more Kenyans are finding viable avenues to turn this dream into reality through the rise of innovative financial solutions and cooperative societies like Savings and Credit Cooperative Organizations (SACCOs). According to the SACCO STAR magazine, issue 64. October-December 2023 edition, the largest SACCOs in Kenya in assets (in billions) are listed on page 12 of the issue.

SACCOs have been in existence for many decades, and present promising pathway towards owning a home. SACCOs are known to offer various support to members on home ownership such as financial assistance, guidance, and a community along the way.

Understanding SACCOs in Kenya

SACCOs are institutions formed under the Sacco Societies Regulatory Authority (SASRA) which is governed by the regulatory framework of the SACCO Societies Act in Kenya. The SACCOs offer financial services that include mobilization of funds and facilitating credit to its members. The cooperatives are owned and managed by members, who pool their savings and resources together. The funds are then allocated from the Sacco savings pool to members who meet the laid-out loan qualifications.

How to Navigate the Home Buying Process with a SACCO

1. Join a Sacco: The first and important step towards home acquisition is through joining the SACCO for example Safaricom Sacco or Kimisitu Sacco. Prospective members must meet the eligibility criteria as agreed by the SACCO in their guidelines, which may include factors such as employment status, residence, and minimum savings requirements.
2. Save to raise the deposit for the house: Once you become a SACCO member, one can start saving towards your home purchase goals. SACCOs offer various savings products, such as fixed deposits or targeted savings accounts tailored for housing acquisition purposes. Members can continuously contribute to build their down payment over time. For example, if you are planning to purchase a house worth Kes 2,450,000, you need to have deposited a minimum of Kes 200,000 and the SACCO will advance you 10x(times) your savings to finalize the payments for your home. To make the process seamless and flexible, the SACCO will charge the house as collateral avoiding the need for guarantorship from another member as is the norm among all saccos.
3. Explore Housing Loan Options: Most SACCOs provide options tailored to members’ needs. The loans are competitively and affordably priced with flexible repayment terms. Most saccos in Kenya provide financing at a fixed interest rate of 12% per annum for the duration of the mortgage, making saccos the best financing partners as compared to banks which charge over 20%p.a. depending on the current applicable Central Bank Rate. When initiating the process, its vital that members consult their SACCOs relationship managers to explore the best loan option to take up that fits their needs.
4. Completing the Home Buying: When finance is sorted and assured, the member can proceed with the home purchase process. At Centum Real Estate, we have partnerships with multiple saccos to facilitate our clients’ access to properties that meet their preferences and budget.

Alternatively, SACCO members who have qualified are at liberty to secure financing to purchase a home on the open market.

5. Manage Mortgage Payments: All credit facilities towards home ownership known as mortgages must be repaid. After acquiring the home of your choice, members must pay back the mortgage as agreed by the SACCO representatives. Virtues such as responsible repayment of the facility must be factored in when prequalifying a member for a facility. SACCOs provide ongoing support and guidance to help members meet their repayment obligations and avoid defaulting. Its vital for the members to be in constant communication with the SACCO representative to stay informed about their mortgage status and, any changes in the repayment schedule.

Conclusion

Purchasing a home through a SACCO in Kenya offers a viable and affordable pathway to ownership for most individuals and families. By joining a SACCO as a potential homeowner, you can leverage the benefits of being a member including access to affordable financing, flexible savings options, and supportive community networks to achieve your homeownership dreams while building the wealth and financial independency for your future. SACCOs remain and continue to play a crucial role in Kenya’s financial sector, they are a valuable and reliable resource for those seeking to own a home or their own.

For details about Centum Real Estate’s residential projects for sale and affiliated savings and credit cooperatives (saccos), please contact our team via email at centum.re@centum.co.ke for more information or check our Sacco’s partnerships here

Edited by: Frida Nthoki- Marketing Department