The dream of owning a home is probably at the top of most people’s wish list. The process can be overwhelming, and for some, may take a few years to move from that initial dream to reality.
An important step in that journey is accessing or qualifying for a mortgage. This, too, takes considerable thought and planning and can be a painstaking process. But there are a few things you can do to make the process less stressful, more straightforward and put you ahead of the game.
Here are some things to consider when applying for a mortgage in Jamaica:
Save for your down payment
One of the first things to consider before applying for a mortgage in Jamaica is that you’ll be required to have a down payment on your chosen property. You’ll typically need to have at least five to 10 per cent of the value of the house. This is often the most challenging part of the home ownership journey for many first-time buyers. A recommendation is that you start saving for your down payment about two to three years before you commence your property search or mortgage application. This gives you time to come up with the required cash.
Here are some tips for saving for your down payment:
- Reduce your spending
- Save any windfall or unexpected cash (e.g., company bonus)
- Open a separate account just for saving for your house
- Find ways to increase your income (e.g., start a side hustle)
- Move back home or get a cheaper place to rent
Once you have the down payment in hand, you’re well on your way.
It’s also advisable that you strengthen your credit, reduce your debt and research mortgage lenders, so you can choose the one with the best offer.
Get pre-approved
The next step is to get pre-approved to determine how much you can borrow. If you’re using a realtor to assist with identifying the right home for you, they will ask to see a pre-approval letter.
The documents required for pre-approval are:
- Copy of driver’s licence
- Birth certificate or passport
- Tax registration number
- Proof of address
- Income verification letter
- Last two payslips
- Completion of the credit report forms
- Statement of affairs (A document which outlines all your income, savings, expenses and debt. Not to worry, your mortgage officer will assist with completing this form)
With the pre-approval letter, you are ready to shop for property and are in a better position to negotiate with your realtor or vendor.
The pre-approval letter is valid for three months. The aim is to find your dream property within that time-frame, make an offer, apply for a mortgage and move in!
Find your property and apply for a mortgage
Once you’ve found your dream home, based on your price point and other must haves, including location, you are ready to make a smart and realistic offer. After making an offer, you can go ahead and submit your mortgage application to your preferred 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
House Documents
- Signed sale agreement
- Valuation report
- Surveyor’s ID report
- Purchaser’s statement of account
- Property tax certificate
- Up to date utilities
Even though you’ve been pre-approved for a loan that doesn’t mean you’ll ultimately get financing from the lender. The final decision will come from the lender’s underwriting department, which evaluates the risk of each prospective borrower, and determines the loan amount, how much the loan will cost and more.
Close the deal!
Once you’ve been officially approved for a mortgage, you’re nearing the finish line. All that’s needed at that point is to complete the closing.
Once your loan is approved, a Commitment Letter and Offer of Finance will be prepared and issued. This is usually done within a day of approval.
They say you shouldn’t put the cart before the horse. The same is true in the home buying process. You’ll need to complete several steps to finance a home, so the more you learn about what’s required, the better informed your decision-making will be.
Happy hunting!
