Mortgage Loan Options for first Time home BuyersHypothecary credit options for first-time home buyers
Real Estate Purchase in the Cayman Islands: Consultation with a Legal Advisor and a Mortgage Provider
Purchasing real estate can be a complex operation - in this play two experts from the credit and financial side tell you what you need to know when you start a real estate operation and give their best advice on how to do the best business and reduce the likelihood of setbacks.
While Oliver Goodwin is an associated member of Ogier's Cayman real estates and local legal services group, Amanda Bodden is a member of Butterfield Bank's staff and manager - here's what she thinks you should know about Cayman legalities. Which is the least amount to make a mortgage on the actual mortgage-rate?
If you are considering buying a condominium or a house that will be used as your main home, you should be prepared for a deposit of at least 10% of the sale amount plus postage and various closure charges, usually a further 10%. Suppose you have no significant outstanding debts, a good policy is three and a half time your total ordinary monthly salary as the mortgage amount.
When adding your suggested down payment/deposit to this number, which is the maximal prize range/budget, you should consider. In order to be regarded as reasonable, your mortgage should normally not be paid in excess of 33% of your total salary. Which different kinds of mortgage are currently available? We currently provide static or floating interest services at Butterfield, flexibility in payments (weekly, bi-weekly or monthly) and our floating mortgage products are free of prepayment charges unless you are refinancing with another bank.
Fix interest becomes a more appealing choice after the key interest has risen by 75 basis points in the last 18 month, and linking to an appealing interest can be a good choice if you don't intend to make mass capital repayments during the fix interest time. Would it be hard for a first-time purchaser to get a mortgage right now?
I wouldn't say that it's harder for a first-time purchaser to get a mortgage in today's mortgage markets than it is for an expert purchaser. Indeed, for the first time, Caymanese buyers are eligible for certain tax exemptions and allowances based on the sale value and position of the real estate, so the prepayment requirements are lower than for buyers who already own or own local real estate.
At Butterfield the default funding and funding requirement is the same for first buyers and second buyers. What is the importance of the interest rates when choosing the mortgage options? Interest rates determine the costs of taking out a loan, what you will be paying the house compared to what you are paying the capital while you are working on the road to full property on your home.
Maturity of your mortgage also affects the costs of taking out the loan, you will be paying more interest to the savings account over a longer period of time, so there is something to consider when considering your options. How much are the possible charges when choosing a mortgage? While there are many different expenses associated with buying real estate and mortgage finance, they should never be "hidden" if you work with a good creditor and a good solicitor.
On top of your down payments to meet your stamping tax and closure expenses, you can be sure that you will have to make about 10% of the total cost of the real estate transaction. At present, the tax on stamps amounts to 7.5% of the sales price/market value of the real estate less a value attributable to movables. Another 0.5% is usually in the form of lawyers' expenses, 0.5% - 1% in the form of banking charges and 1% - 1.5% to the CI government for the stamping levy on the mortgage.
However, most financial institutions, Butterfield included, require a rating to determine the value of the real estate to be acquired at your cost. As soon as someone has filled in the mortgage claim request forms, how long does it take for them to know if a mortgage will be offered?
Butterfield usually processes mortgage requests within five to seven working days of receiving the request and all necessary documentation. Once the mortgage has been granted, we draw up a Facility Letter (sometimes referred to as an Offer Letter) setting out the requirements of the mortgage for the applicant to check andcept.
How would you advise your clients to obtain the best possible mortgage business? It would be my top tip for buyers to set the funding procedure in motion at an early stage, as this would put them in the best possible starting point to look around and ensure a viable mortgage supply. It is a good idea to meet with a creditor before making an initial bid, we can help you by identifying what you are eligible to take out and what funding is likely to be offered to you.
Here at butterfield we also provide pre-approvals so that you are better equipped to make an enquiry for a listing, and the vendor can look at your listing more favorably if it has the convenience of obtaining finance. When buying properties, what should the buyer and vendor consider?
Cayman recognizes that vendors and buyers work exclusively with realtors and do not seek impartial counsel on their transactions. The " buying agency " has its charges made by the seller and the charge is usually a percentage of the sales prices negotiated.
The buyer's representatives should make this possible conflicting interest clear to you at the beginning of a deal. When you make an application to buy a real estate using the CRIREBA documents "Application to Buy", the signature of the documents by the seller represents a legal and effective sales agreement in accordance with the conditions laid down in this documents.
In such a case, a purchaser would be under a legal obligation to acquire this real estate at the time and for the amount specified in the "Offer". Ensure that any bid, whether made through the Kireba Purchasing Proposal or otherwise, is made under the necessary terms and exclusions, usually conditional upon the agreement of reasonable financing to support the sale.
Make sure that you feel completely at ease, that the real estate is benefiting from legal actionable and recorded right of way over the streets or lanes necessary to get in or out of the real estate up to and including a major road. Ask the Design Office whether all building permits necessary for work on the object have been obtained and whether no pending execution orders for the object have been or will be made.
Check with the seller before you exchange purchase agreements and make your down payment - this includes making sure there are no open quarrels regarding ownership, border matters, land matters, execution orders, third owner, etc. Is there any additional consideration when I buy a home with someone else?
When you buy a home together with a beloved person or another shareholder, you need to make a decision whether to do so as co-owner or joint owner - the differentiation is important and there is a detailed statement on Ogier's special Cayman real estate website here. Though it' probably not the first thing on your mind at this point, you should also consider making a will to decide who will take over the property. Even though it is not the first thing on your mind at this point, you should also consider making a will to determine who will take over the ownership.
Which is your most important tip for buyers to prevent something from going awry? There' a lot of red tape on the right and credit side - you can make considerable time savings by getting everything together before you start and by telling your attorney early.