How to Apply for a Mortgage in Jamaica?

The National Housing Trust (NHT), commercial banks, building societies, credit unions, and one life insurance company are Jamaica’s leading mortgage loan lenders. In order to qualify for a mortgage loan in Jamaica, you must be able to prove to these mortgage-lending organizations that you can fulfill your financial duties. Typically, a mortgage lending organization wants borrowers to make three times as much money each month as their mortgage payment. They want proof of job in the form of a letter from the prospective borrower’s employer as well as salary advice for the previous two or three months to verify income. Depending on the mortgage lender, the self-employed must provide bank statements from various time periods as well as recent financial information from an accountant as proof of their income.

Financial Institutions

Building societies do not impose lending limits on their clients, but they do demand that potential debtors open a bank account into which the closing expenses goes. The life insurance company lends to both policyholders and non-policy holders, and while commercial banks do not typically require prospective borrowers to have an account prior to making a mortgage application, they typically do so in order to make the loan repayment process easier. Credit unions also tend to require non-members to apply for membership when applying for a loan.

National Housing Trust

The NHT also provides mortgage loans to qualified contributors. This means that you have to be a contributor to NHT in order to get a mortgage loan. The NHT provides contributors with loans so they can buy a home that is currently for sale on the open market by a person or organization other than itself. This is a loan for those without homes, however, a contributor who owns land or who has the legal right to erect a structure on a certain piece of property and wants to begin construction may apply for a build-on-own-land loan. For participants who have bought land using a home lot loan or a serviced lot loan and wish to build, NHT also provides a construction funds loan. In order to qualify for a mortgage loan from the NHT, you must:

• Be between the ages of 18 and 65.
• Identify the house you wish to purchase.
• Agree on a price with the seller and write a formal sales agreement.
• Have the registered certificate of title for the available property.
• Pay at least a 5% deposit on the property.
• Earn an income that will allow you to repay the loan.
• Make at least 52 weekly contributions, 13 of which should be made 26 weeks prior to the loan application date.
• Account for your contributions and pay any past-due contributions with interest.

By working together to give loans to qualified NHT contributors, the National Housing Trust and the lending institutions have what is known as a pari passu agreement. However, the NHT has placed financial limits on how much any qualified borrower may get.

The pre-qualification process, which is the first step in obtaining a mortgage, mainly serves to allow the lending institution to ascertain whether you fulfill the basic requirements for the mortgage. This entails supplying proof of age, an explanation of your monthly income and spending, and evidence that you have the necessary closing fees. It is wise to get in touch with the mortgage lender as soon as the application and pre-approval paperworks complete. The lending institution will then set up an interview to assess whether you will get the loan. There are certain costs and requirements associated with a mortgage loan some of which include legal fees, payable charges to the government, a valuation report done by an approved valuator, a sales agreement, a copy of the certificate title, property tax certificates, and a registered commissioned land surveyors report.

It shouldn’t be difficult to get accepted for a mortgage in Jamaica once you provide the necessary prerequisites. Financial institutions are constantly eager to take on new customers. Below is what you must do in order to get a mortgage in Jamaica:

Save Your Down-Payment

One of the fundamental things to keep in mind when submitting an application for a mortgage in Jamaica is that you’ll need to make a down payment on the property of your choice. It’s wise that you are debt-free before applying for a mortgage. Financial organizations discourage the use of student loan debt, mortgage debt, and other risky debts like credit card debt and car payments. It is wise to lower your existing debt to a minimum, ideally zero, before you take on the challenge of mortgage debt. A mortgage loan usually requires you to have between five to ten percent of the property’s value.

Closing costs that typically go unnoticed, usually ranges from 10 to 15 percent of the mortgage balance. For many first-time purchasers, this is the phase of home ownership that presents the most challenge. You should start saving for your down payment as soon as you can or roughly two to three years before you start looking for a home or applying for a mortgage. This allows you time to secure the needed funds. Once you acquire the down payment, you can move on with ease. Additionally, it’s a good idea to build your credit, and research financial institutions so you can select the one that offers the greatest deal. The more you can offer on your down payment or deposit, the lower your monthly payments can be and the more interest you’ll save.

Tips for saving your down payment

• Reduce the amount you spend especially on goods you want. You can cut your shopping budget, limit eating out to special occasions, and bring lunch to work instead of ordering takeout.
• Save extra money or unexpected money – money received from periodic windfalls like commission, salary bonus, sale of personal assets, etc.
• Look for strategies to boost your revenue.
• Create a bank account that will be solely used for mortgage savings.

Obtain Pre-approval

The following step is to apply for pre-approval in order to learn how much you can borrow. It may be tempting to look for a home next, but the best plan of action is to have your financing approved first. Knowing exactly how much you can spend will help you focus your search and facilitate communication with your real estate agent. Additionally, agents and sellers will take you more seriously if you have an approved letter in hand. Your realtor may require a pre-approval letter if you are working with them to find the ideal home for you. The documents required for pre-approval are:

• Copy of driver’s license
• Birth certificate or passport
• Tax registration number
• Proof of address
• Income verification letter
• Statement of income (self-employed persons ONLY)
• Last two payslips
• Completion of the credit report forms
• Statement of affairs (A document that outlines all your income, savings, expenses, and debt. Not to worry, your mortgage officer will assist with completing this form)

Due to the pre-approval letter, you are ready to seek for a home and are in a better position to negotiate with your broker or seller. The letter of pre-approval is valid for three months. Finding your ideal home within that time frame, making an offer, applying for a mortgage, and moving in are the goals! Whether you are salaried, self-employed, or using your NHT benefit, you can request a customized checklist from the financial lender or visit their website.

Make an Offer

You may begin looking for a home once you have received your pre-approval. There are certain things to remember. The length of time a property has been advertised, for example, can inform you how much competition you’re up against. Sellers might be more open to accepting a lower offer if the house has been on the market for long. Keep in mind important questions like does the home require renovated or repaired? The repairs can become included in your offer or requested from the vendor. A real estate professional can guide you toward a sound assessment. Once you’ve located your ideal house, you’re prepared to submit a wise and reasonable offer based on your budget, your priorities, and the property’s location. It’s time to sign the sales agreement when you’ve reached an agreement on pricing. For that, you’ll need legal representation.

Keep in mind that even if you are approved for a loan, there is no guarantee that the lender will offer funding. The underwriting division of the institution, which assesses each potential borrower’s risk and determines the loan size, cost, and other factors, will make the final decision.

Valuation and Surveyor Reports

After making an offer, the next important step is to get a valuation and surveyor reports completed. Their reports will outline the property’s actual worth as well as its borders and legal needs.

Valuation Report

A valuation report assesses the property’s value. This report protects you and the lender from paying more for a home than what it is actually worth. If your valuation report shows that the purchase price is less than the property’s value, you have increased your equity! On the other hand, if the valuation report indicates that the value of the home should be lower than the selling price, lenders may opt to not lend more than what the property should be worth.

Surveyor Reports

A surveyor report is a legal document that indicates a property’s boundaries and potential violations that may affect the property’s title. A surveyor report provides an illustration of the physical features of the property along with a written report that details the surveyor’s concerns and opinions.

You should receive a property tax certificate and documentation showing that all utilities have been paid from the seller’s attorney. If you wish to purchase a townhouse/apartment, a letter from the Strata is necessary. You also pay your mortgage fees at this time. Bring everything to your mortgage lender so that you may complete your mortgage. For a complete list of the documents needed, check with your lender. 

Submit Your Mortgage Application

After making an offer, you can submit your mortgage application to your desired lender. Here are some of the documents you’ll need:

Personal documents

• Job letter
• Last three payslips
• Two Government-issued ID
• Tax Registration Number (TRN), Social Security Number (SSN) or equivalent in other countries

NHT Documents

• Birth Certificate
• National Insurance Scheme (NIS) Card
• Verification of NHT contribution for the last seven years

Property Documents

When you apply for a mortgage loan, along with providing your personal and NHT documents (if necessary), you must submit the following property document. This is to ensure that you are ready to complete the home-buying process:

• Signed sale agreement
• Valuation report
• Surveyor’s ID report
• Purchaser’s statement of account
• Property tax certificate
• Up-to-date utilities

Close the Deal

You’ll be close to the finish line after your mortgage application has received formal approval. At that time, merely completing the closing is necessary. A Commitment Letter and Offer of Finance is usually provided once your loan has been approved. Normally, given the next day after approval. Closing the deal will be the responsibility of the seller’s lawyer. They will finish the property transfer and provide your mortgage lender with all the required paperwork. The loan amount will then be paid to the seller’s attorney after your lender registers your mortgage. It’s time to give the keys once the seller agrees that the conditions of the selling agreement are met.

To finance a home, there are a number of procedures you must take. Therefore the more you learn about these steps, the more informed your choices will be. This will give you a better chance of gaining a mortgage in Jamaica.

Frequently Asked Questions