The prospects of becoming a home owner in Kenya can be very daunting especially if you do not have the money required to make your dream come true. It is in such instances that potential home owner considers the possibility of approaching a third party to get the finances they need to back their dreams of home ownership. Borrowing is not easy but a good option in such cases.
So the decision is made, a home is what you want and borrowing is the way to go about it. Do you have any idea where you can go to get a loan? Do you know what it takes for someone or an institution to open its doors to you and write you a cheque? Your chances of getting a loan are directly proportional to the how well you prepare yourself. Knowing what the potential lender is looking for is the best way to prepare. All lenders use what is commonly knows as the 5 P’s of credit to analyze their clients.
Your ability to qualify for a loan is all dependent on, first and foremost you as a person. This is one instance where to qualify you need to put your best foot forward and assure the lender that you can be trusted with their money. The lender will depend a lot on their first impression of you to decide if they like you or not. They will then dig into your past and present, trying to figure out if you are clean. All your dealings must be above board. Here is where your reputation will precede you.
Showing clearly that you are more than capable to handle the loan will work to your advantage. If you are at a place where your needs are more than the money you have, that loan will remain a distant dream. This is what makes taking multiple loans very hard. This also ensures that if you do qualify to get a loan, you are only given what you can handle.
In business, capital is simply indicated your personal stake in that business. The higher your stakes in a business the more committed you are and the more likely you are to succeed. Lenders tend to favor people who have invested heavily in their business. If you are not in business, the lender will consider what you are worth to determine your potential. You have to show that what you owe is lower that what you own. This is further assurance that you can easily pay for the loan without defaulting.
Collateral is the fall back position for any lender. A lender needs to know that if for any reason you are unable to service your loan then they can easily recover their money. You can used your assets as security and in case of default, the lender will sell the asset and recover their money. Some lenders may require a third party guarantor in addition to collateral for added security.
You may have all your ducks in a row, with everything checking out about you but there are some external forces that can knock you out of consideration by a lender. The business environment in your sector as well as other sectors can give any lender doubts about lending to you. This is simply because if your sector is affected negatively directly or indirectly it will affect you.
And there you have it. These are the key factors that are analyzed and checked before money can be released by a lender. They are commonly known as the 5 C’s of credit. Keep them in mind and ensure that you are doing well in each one of them before you approach a lender. There are simple things you can do with this knowledge to increase your chances of getting a loan for your home ownership in Kenya.
