Save money by refinancing your existing loans. Learn when refinancing makes sense, how the process works, and which banks offer the best refinancing deals.
Loan refinancing means replacing your existing loan with a new one, typically with better terms. The new loan pays off your old loan, and you make payments on the new loan going forward. Kenyans refinance to secure lower interest rates, reduce monthly payments, change loan tenure, or consolidate multiple debts into one loan.
2-4%
Typical rate reduction
KES 100K+
Potential savings on KES 2M loan
2-3 Weeks
Typical refinancing process
Refinancing isn't always the right move. Consider these scenarios where refinancing typically makes financial sense.
When: Current market rates are 2%+ lower than your existing loan rate
Example Scenario:
You took a KES 3M mortgage in 2023 at 14%. CBR has dropped and banks now offer mortgages at 10-11%. Refinancing could save you KES 200,000+ over the remaining loan period.
✓ Refinance if rate difference is 2%+ and you have 3+ years remaining
When: Your CRB score has increased by 100+ points since taking original loan
Example Scenario:
You got your first loan at 18% with a CRB score of 620. After 2 years of timely repayments, your score is now 750. You can refinance at 13-14%, saving significantly.
✓ Check credit score annually - improvement opens refinancing opportunities
When: Your income increased 30%+ since taking original loan
Example Scenario:
Salary increased from KES 80K to KES 120K. You can now qualify for better rates and might refinance with shorter tenure to pay off faster while maintaining affordable monthly payments.
✓ Higher income = lower perceived risk = better rates
When: Monthly payment exceeds 40% of income or you're struggling to pay
Example Scenario:
Business income dropped and KES 50,000 monthly payment is crushing your budget. Refinance with longer tenure to reduce monthly payment to KES 35,000, improving cash flow.
⚠️ Note: Longer tenure means more total interest, but prevents default
When: You're juggling 3+ loans with combined high interest
Example Scenario:
Current situation:
Refinance into single KES 1.5M loan at 13% = KES 40,000 monthly (saves KES 8,000/month!)
✓ Debt consolidation through refinancing simplifies finances
When: Life changes require loan restructuring
Example Scenarios:
Primary benefit - save thousands in interest over loan period
Improve cash flow by extending tenure or lowering rate
Consolidate multiple loans into single payment
Pay off faster with same or slightly higher monthly payment
Move to bank with better service or more favorable terms
Top-up loans while refinancing (if you qualify)
Old lender may charge 1-3% of outstanding balance
New lender charges 1-4% of new loan amount
For mortgages/secured loans: KES 10,000-50,000
For secured loans: KES 20,000-100,000
New loan insurance premium
For mortgages: stamp duty, registration fees
Refinancing a KES 2M Mortgage
Current Loan:
Balance: KES 2,000,000 | Rate: 13% | Remaining: 15 years | Monthly: KES 25,435
Refinance Option:
Amount: KES 2,000,000 | Rate: 10% | Term: 15 years | Monthly: KES 21,473
Refinancing Costs:
Savings Analysis:
✓ Refinancing makes sense - saves KES 473,160 after costs
Get payoff statement from current lender showing exact outstanding balance, remaining tenure, and any early repayment penalties.
Timeline: 1-3 days
Apply to 3-5 banks for refinancing quotes. Provide current loan details and request full cost breakdown including all fees.
Timeline: 1 week
Compare monthly savings vs total refinancing costs. Ensure you'll save money within reasonable timeframe (typically 2-3 years break-even is acceptable).
Timeline: 1 day
Apply with your chosen lender. Submit all required documents promptly to avoid delays.
Timeline: 1 day
New lender verifies documents, checks credit, conducts valuation (if applicable), and approves loan.
Timeline: 5-10 business days
New lender disburses funds directly to old lender to close that account. You may need to coordinate between both banks.
Timeline: 2-3 days
Receive confirmation that old loan is closed. Begin making payments on new loan. For secured loans, complete title/security transfer to new lender.
Timeline: 1-2 weeks (for secured loans)
Total Timeline:
• Unsecured loans: 2-3 weeks
• Secured loans/mortgages: 4-6 weeks
KCB actively pursues refinancing business with competitive rates. They often waive processing fees for mortgage refinancing. Strong digital platform for tracking application.
✓ Best for: Mortgage refinancing, competitive rates, established customers
Equity offers refinancing with simplified documentation for existing customers. Fast processing and extensive branch network. Flexible on tenure adjustments.
✓ Best for: Quick processing, existing Equity customers, flexible terms
Co-op offers preferential refinancing rates for SACCO members. Strong in mortgage refinancing with reasonable processing fees. Good customer service throughout process.
✓ Best for: SACCO members, competitive mortgage rates, reliable service
ABSA targets refinancing market aggressively, especially for high-value mortgages. Premium customers get expedited processing. Willing to refinance larger amounts (KES 10M+).
✓ Best for: High-value loans, premium customers, large refinancing amounts
While similar, refinancing and debt consolidation serve different purposes. Understanding the difference helps you choose the right strategy.
| Aspect | Refinancing | Debt Consolidation |
|---|---|---|
| Purpose | Replace ONE existing loan with better terms | Combine MULTIPLE loans into one |
| Goal | Lower rate, change terms, or switch lenders | Simplify payments, potentially lower overall rate |
| Best When | Rates dropped or credit improved | Juggling multiple high-interest debts |
| Typical Savings | 2-4% rate reduction | 20-40% monthly payment reduction |
| Process | Standard loan application | More complex - coordinating multiple payoffs |
Yes! You can refinance your mortgage while consolidating credit card and personal loan debt into the new mortgage. This is called "cash-out refinancing" - you borrow more than your current mortgage balance, use excess to pay off other debts, and have one lower-rate payment.
Should you refinance?
Rate Difference:
2%+ = Definitely consider
1-2% = Calculate carefully
Under 1% = Probably not worth it
Time Remaining:
5+ years = Good candidate
2-5 years = Analyze closely
Under 2 years = Usually not worth it
Savings depend on rate difference, loan amount, and remaining tenure. Typical savings: 2% rate reduction on KES 2M over 10 years = approximately KES 200,000-300,000 in total interest saved.
Temporarily yes, as it involves a credit inquiry and closing old account. However, impact is minimal (10-20 points) and temporary. Successful refinancing with timely payments will improve your score over time.
It's difficult but possible if you have significant equity (for secured loans) or can provide additional collateral. Interest rate improvements will be limited. Focus on improving credit first for 6-12 months before refinancing.
There's no legal limit, but refinancing too frequently (more than once every 2-3 years) may raise red flags with lenders and accumulate excessive fees. Refinance when rate difference is significant (2%+) or life circumstances change substantially.
Compare both options. Current bank may offer loyalty discounts and faster processing, but competing banks might provide better rates to win your business. Get quotes from both before deciding.
Yes, but you'll need stronger documentation: 2-3 years of audited accounts, tax returns, and business registration. Expect slightly higher rates (1-2%) than salaried employees. Established businesses (3+ years) have better chances.
Compare refinancing offers from top Kenyan banks.