Absa Warns Mortgage Approval Does Not Mean Immediate House Keys

Getting a mortgage approved does not necessarily mean a homebuyer is immediately ready to take possession of a property. Absa Bank Kenya has highlighted the legal and conveyancing steps that must still be completed before financing can be disbursed and the keys handed over.

Head of Mortgage Beatrice Chege said bank approval is only half the journey. The process continues through the legal stage until the property is transferred and registered in the buyer’s name.

Borrowers who have secured approval still have to navigate ownership verification, preparation and execution of legal documents, payment of taxes and other transaction costs, necessary approvals and final registration. These steps bring together the buyer, the buyer’s advocate and the lender’s legal representatives.

During conveyancing, ownership of the property is verified. Contracts and transfer documents are prepared and executed. Relevant taxes, fees and clearances are processed. Depending on the transaction, borrowers may also need to interact with government land administration systems, including the Ardhisasa platform, and upload documents and signatures electronically.

Absa noted that delays can arise when documents take time to move between the different parties or through government offices. Borrower disengagement after a lengthy application and approval process is another potential challenge.

Fragmented information is also a common issue. Customers often interact with different teams at different stages and may only learn about certain requirements or costs once they reach the legal phase.

Additional costs can include stamp duty, legal fees, registration charges, valuation costs, land rates clearance and insurance premiums. Buyers who have not budgeted for these items may need to secure extra funds before the transaction can proceed.

Digital processes can add complexity for customers using online government or lender platforms for the first time. The bank said lenders can help reduce delays by maintaining communication with customers throughout the conveyancing stage rather than leaving them to navigate it alone.

Regular updates, clearer timelines and explanations of what borrowers are expected to do at each stage are recommended. Digital support should also form part of the process where online platforms are required.

The advice comes against the background of a relatively small residential mortgage market in Kenya. According to the Central Bank of Kenya’s 2024 Residential Mortgage Survey, there were 30,016 mortgage loans at the end of 2024, up from 29,260 the previous year.

The value of outstanding mortgage loans rose by 3.3 per cent to Sh279.3 billion. The average loan size declined from Sh9.4 million in 2023 to Sh9 million in 2024. The average interest rate stood at 14.9 per cent, with most loans on variable rates and most banks maintaining loan-to-value ratios below 90 per cent.

Absa said improving the mortgage experience should extend beyond the approval decision. Borrowers should receive clear information from the beginning on the stages involved, the documents required, the costs they must meet and the actions needed before a property can be registered in their name.

Borrower education, the bank argued, should remain continuous rather than ending when financing is approved.