Mortgage Certificate – How much do I qualify for?
Hi there!
It’s time for another engaging post with Thought2Realty and today we discuss the steps of obtaining a mortgage certificate in Barbados.
You may have so many questions in mind, much like I did at the start of my journey
- Where do I even start?
- Who do I choose to do business with – Credit Union or the Bank?
- What options are out there?
- What are your current mortgage rates?
- How much do I have to repay on the amount borrowed?
- How many years do I have to repay?
But alas, I am getting ahead of myself. Let’s start at the beginning!
First Steps
The first thing we did was to make a lot of calls to get the ball rolling. We called lending agency after lending agency and even scheduled some meetings with loan officers to find out what was the best option for us. This should also be your first step.
Unsure of what to ask? Ask to speak to a loans officer; one is almost always available and willing to help. Ask about their:
- Current interest rates for land loans and mortgages.
- The number of years you have to repay.
- The required deposit for land loan or mortgage. (See the link below for an explanation) https://thought2realty.com/buying-land-in-barbados-four-initial-costs/
You will always find varying terms and conditions across agencies so do your research and shop around! I cannot stress this enough. This may take a little time but it is so worth it for such an important milestone. The last thing you want is to commit yourself to a mortgage with a bank or credit union, then have to switch institutions later down the road for one reason or another.
Keep in mind your options are not limited to banks and credit unions, there are other companies who are in the mortgage market now, such as insurance companies. You can try these too.
The goal is to narrow down your list of potential companies and decide with whom you want to do business with. I would say to about two to three lending agencies.
There are so many options to choose from out there and every institution offers you something different. There is something out there for you. Be encouraged!
What is a Mortgage Certificate?
How Do I Know How Much I Qualify For?
After you narrowed down your list, you can set up an appointment to meet with a loans officer. You may be able to send your information via email to them, but you will eventually have to meet in person. See a list with the information you will need below, under the “What do I need to take with me?” section below.
The next step would be to find out how much you qualify for on a home loan. That is, how much a bank or credit union would be willing to lend you to make your property purchase.
The initial meeting would tell you any additional items you would need to take with you. It is, however, best to find this out before you go so that you can make the most of your time there.
There will be more than one trip to the financial institution so be prepared. 🙂
Mortgage Certificate
The goal of meeting with the loans officer is to obtain a mortgage certificate. This is literally a document which tells you and/or a third party how much money they would be willing to lend you to purchase your property, based on your current expenses and income.
Keep in your mind, if you are buying land and building your home, this is represented by the total amount shown on the certificate. The same applies if you are buying an already completed structure/house. The amount quoted to you will also include the attorneys’ fees associated with the property transaction; which we discuss at length in the post What to expect from your attorney in a property purchase. Remember to choose the path which is best for you.
As mentioned before, every agency is different and as such, each agency will give you a mortgage certificate for different periods of time.
When my husband and I first went for a mortgage certificate, we got one which expired in six months. Years later, when we were ready to begin our journey, we got one which had an expiration date of a year. You can see the copy of our mortgage certificate below.
What do I need to take with me?
You will be told the items are required in advance of your appointment. However, if you haven’t called yet, here is a general list of items you would need:
- Proof of address
- Proof of employment in the form of a job letter
- Two months recent payslips/weekly payslips for the duration of two months
- Offer letter outlining the intention to sell from the seller or real estate agent
- Land Valuation (from an approved valuer)
- Quantity Surveyor Estimate (estimate of costs to build the structure)
The last two items apply only if you are buying land and building your home. These can be submitted at a later date to the lending agency.
Anything Else?
Yes, most definitely! You should have a total in mind of your monthly expenses. Some things to keep in mind:
- Do you have a car? How much on average do you spend to maintain it? (Gas, insurance, servicing). Paying bus fare would be substituted here
- What are your utility bills per month? (Think about water, light, natural gas).
- Do you have health or life insurance?
- How much is your weekly or monthly grocery bill? (If it is weekly you must multiply by 4)
- Do you have any student loans?
- What other debts payments do you currently make on a monthly basis?
At the end of it all, you should receive a Mortgage Certificate.
This tells you the maximum amount you can borrow. The certificate is usually valid for a period of three months to possibly a year. It varies depending on the bank or credit union. As mentioned before, our mortgage certificate was valid for a year.
The mortgage certificate should be on the lending agency’s official letterhead, signed by the loans officer and stamped with the lending agency’s seal. The letterhead and signature of the lending agency we went with, have been removed from the picture below.
Step one ….completed! Congratulations, you are one step making your thought become reality.
