Finding the Right Mortgage in Barbados
Finding the right mortgage in Barbados is an important part of the buying process and while attractive interest rates are a major selling point. There are other factors that should be considered before the final decision is made.
Interest rates are dynamic in the mortgage business, so it is important to find the right lender for your needs as well as one that is competitive, with good customer service and an attractive portfolio of products on offer.
The financial market in Barbados follows much the same criteria to make an assessment for a mortgage, namely that the lender considers the risk involved by understanding the financial position of the applicants and the security being offered.
The main players are the banks (who control the majority of the market), insurance companies, and credit unions. In Barbados, the capital and interest repayment loan is the most popular type of mortgage and as the market continues to grow to supply demand, fixed rates and interest-only options are being introduced to entice new business.
Choosing the right mortgage for your property purchase is an essential process and can have financial benefits in the long term. While the easiest option may be to go direct to the lenders, it may be worthwhile to consider engaging the services of an independent mortgage broker to help navigate the wide variety of mortgage and financing options available. There will be a professional fee due, usually based on the value of the mortgage, but this can be easily offset by savings made from making an informed and well-advised decision.
Going the independent broker route can smooth out the purchase process by offering independent advice, as well as guiding you through all the necessary application forms and helping with ensuring all the requirements to purchase the property have been met.
It should be noted that there are few mortgage brokers on the island, let alone the region, and they are not regulated, so it is important to get references and to ensure that the broker is competent and experienced.
The million-dollar question of how much one can borrow is usually determined by considering the income and expenditure of an applicant, with lenders allowing for a mortgage payment that reflects up to 40% of the applicant’s gross income.
There are 100% mortgages available, but most lenders will limit it to 95% of the cost of the property. The length of a mortgage can extend up to 35 years, although this figure is also determined by other factors. It is important to be aware of any additional costs and/or fees up front and to take these into account.
Interest rates can also vary from just under 6% to 10%. Loans to purchase land or bridging finance for a construction project attract a higher interest rate, so it is worthwhile being very clear as to your requirements.