Oran Hall | Mortgages for non-residents of Jamaica

QUESTION: We are writing to inquire about obtaining a mortgage for a one-bedroom unit at a condominium in Montego Bay. We are both US citizens and residents. One of us had Jamaican parents. We also work in the USA. We would like to get pre-approval for a mortgage. Are you able to provide information about the mortgage process in Jamaica for buyers working and residing in the USA?

– Deborah

PERSONAL FINANCIAL ADVISER: The pre-approval process sets out to establish your employment status, tax status, and importantly, your credit rating in an effort to assess if you qualify for the mortgage.

The commercial banks are major players in the mortgage market as there are only a few building societies, but credit unions also participate in the market. The following is a general outline of the process although there could be some minor variations depending on the lender.

You are required to supply your tax returns for the last two years, your credit report with a minimum score of 660, a job letter, your pay slips for the last three months, a valid government-issued form of identification and your social security card.

The documents are sent to the mortgage department for assessment and you are notified if the result is favourable.

If you decide to proceed with the application, you are assigned a loans officer, who will take you through the various steps of the loan-application process.

You may opt to borrow in US dollars or Jamaican dollars.

You will be required to apply for a Tax Payer Registration Number, or TRN, after the pre-approval process. To do so, you can download the application form from www.jamaicatax.gov, complete and sign it, copy the first two pages of your passport and have a notary public sign them.

You will need to send a letter authorising the person of your choice to act for you in making the application and collecting your TRN if you are not able to collect it yourself.

I suggest that you engage the services of a reputable real-estate agent or company. The website of the Realtors Association of Jamaica – http://realtorsjamaica.org – is a good place to go for this information.

You will also need a reputable attorney-at-law or legal firm to handle the legal issues.

It is the responsibility of the realtor to match the property to your unique needs. It is reasonable to expect the realtor to show you what the property looks like. Technology can facilitate this easily.

Once you have satisfied yourself that you want to purchase a particular housing unit, you should make an offer to the vendor either directly or to his representative through your representative.

If it is accepted, a land survey and title search should be done to identify what you are buying and to ensure that there are no other claims or conflicting interests registered against it. Your legal representative is best able to do this for you.

The next step is to sign the sale agreement, which is usually prepared by the vendor’s attorney, and make the deposit. The vendor also signs that document, thus making the agreement binding on both parties.

It should be submitted to the Office of the Registrar of Titles and government duties paid. Documents relating to the transfer of property should be stamped at the Department of Stamp Duty and Transfer Tax (Stamp Office) within 30 days of being signed to avoid substantial penalties.

The loan approval process usually takes about 90 days to be completed and how much you are able to borrow relative to the purchase price depends on what proportion of the cost you are able to finance yourself.

In most cases, the mortgage-lending institution requires that you make a deposit on the property, but it varies, depending on the lender. Bear in mind that you are responsible for the closing costs, which include legal expenses and the charges that the Government requires. These could amount to 10 per cent to 15 per cent of the purchase price.

The term of the loan varies, and a primary consideration is how close you as borrower are to your 70th birthday as this is generally the age by which lenders require the loan to be paid off.

Generally, mortgage-lending institutions will facilitate early repayment of the loan, but they tend to require notice of three months. If such notice is not given, the borrower is required to pay interest for three months.

I hope all goes smoothly and well for you with this venture and that it opens the way to a wonderful Jamaican experience for you both.

- Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel. finviser.jm@gmail.com