The Caribbean has some of the most sought after properties in the world, which is not surprising for a place that offers fantastic weather, clear blue waters and white sand beaches. A common misconception is that persons living outside of the Caribbean cannot apply for a mortgage from a Caribbean lending institution, but must have cash in the bank. This article will dispel these myths and let you in on a less known secret – Caribbean mortgages are indeed available to non-residents wishing to buying or building property in the Caribbean.
Caribbean mortgage market
The Caribbean enjoys a healthy banking system and mortgage market that is largely unregulated. It is quite a challenging experience searching and processing mortgage applications in the Caribbean and it is at best a slow process. With quite a few Caribbean lending institutions to choose from this is where the experience of local mortgage brokers comes in, as they can recommend the best product and handle all the paperwork for you.
Subject to status
Mortgages to overseas residents are available for the purchase or construction of properties in the Caribbean. As with any mortgage agreement your application will be subject to status. You may also be required to satisfy other additional criteria above that which a Caribbean resident would be required to meet. We look at some of the criteria further in this article.
The legal process
Most solicitors in England are on the panel of mortgage lenders, which means that your solicitor will inevitably act for you and your mortgage lender. However, this is not the case with Caribbean lending institutions who will usually have a separate attorney acting for them, with the fees for the lender’s attorney to be paid by you. Your attorney and the lender’s attorney will communicate with each other up until the time that the mortgage funds need to be released, which will be handled by the lender’s attorney.
Mortgage loans are available to overseas residents in US dollars, pounds sterling or local currency and are subject to the usual mortgage lending terms and conditions. The loans are usually limited to a maximum of 75% loan-to-value and maximum loan term of 15 years. For Caribbean residents this is normally 80% with a maximum term of 20 years. Interest rates are commonly higher for overseas residents, usually pegged at 3% above the US$ LIBOR rate in London and these are reviewed every quarter. There are no interest only payment mortgages available in the Caribbean usually and all loans are therefore capital and interest repayment. It should also be noted that normally no penalties are applied for early settlement of your mortgage.
Criteria for getting a Caribbean mortgage
Like any loan agreement the lender will need to be sure that you can afford to service the loan over the term of the loan period. There are a number of eligibility criteria that are required to be satisfied and some of them are listed below:
- Two forms of identification (usually a passport and/or driving licence are accepted)
- A credit report from credit agencies such as Experian to evaluate your creditworthiness
- Copies of three months’ bank statements to show income and expenditure details
- Three years’ accounts for self-employed applicants
- Some lenders may require police checks
This article’s main purpose is to make you aware that Caribbean mortgages are available to overseas residents who wish to buy or build property in this beautiful part of the world. It is also very important to note that if your property investment in the Caribbean is dependent upon a mortgage, you should seek pre-approval from a Caribbean lending institution BEFORE commencing with your search to find a suitable home or land on which to build that dream home in paradise.
Investing in a property in the Caribbean can be a taxing experience if you try to do it all yourself. The processes may differ slightly to other parts of the world and you may find the laid back approach frustrating. This is why you need to engage someone with extensive knowledge of the process for buying or building property in the Caribbean.