Finding the Right Mortgage in Barbados
Finding the right mortgage in Barbados is integral to the buying process, while attractive interest rates are a significant selling point. Other factors should be considered before the final decision is made.
Interest rates are dynamic in the mortgage business, so it is essential to find the right lender for your needs, one that is competitive, has good customer service, and has an attractive portfolio of products.
The financial market in Barbados follows much the same criteria for assessing a mortgage, namely that the lender considers the risk involved by understanding the financial position of the applicants and the security being offered.
The leading players are the banks (who control most of the market), insurance companies, and credit unions. In Barbados, capital and interest repayment loans are the most popular type of mortgage, and as the market continues to grow to meet demand, fixed rates, and interest-only options are being introduced to entice new businesses.
Choosing the right mortgage for your property purchase is an essential process and can have financial benefits in the long term. While the most straightforward option may be to go directly 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, guiding you through all the necessary application forms, and helping ensure all property purchase requirements 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 essential 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 other factors also determine this figure. It is essential to be aware of any additional costs and/or fees upfront and to consider these.
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 being very clear about your requirements is worthwhile.
