If you are looking to buy or invest in Barbados property and need to fund your purchase with a mortgage, there are a number of options available from Barbadian Banks.
There are six commercial banks in Barbados, and each of them has various mortgage options for you to choose from. You don't have to be a national to obtain a mortgage in Barbados, but you will need to have proof of income from your home country, or a letter from your employer in Barbados stating your years of service, the position that you hold within the company, and your current gross annual salary.
You will also need to present photo identification such as your national ID card or passport. You will need proof of your current address by presenting a utility bill. You need to provide a letter of reference from your bank (if it is a different bank) to apply for a mortgage along with an agreement of sale from the person selling the property and contains the accepted offer. If you are buying vacant land and intend on building, you will need to show them a construction estimate of costs along with approved plans for the build.
Mortgages are available in Barbados to buy an existing property, to buy land, new construction, or to make renovations to your current property.
At Royal Bank of Canada in Barbados they offer up to 95% financing on the property. If you bought a house that cost $600,000 Barbados dollars you would need to put down a deposit of $30,000 Barbados dollars and the bank would lend you $570,000 Barbados dollars. The fixed interest rate is approximately 8% at the time of this writing (September 2008) and depends on whether you take out a variable or fixed rate mortgage your repayments each month could be approximately $3800 on the $570,000 Barbados dollar mortgage.
They also offer up to 30-year repayment plans up to the age of 40, so the mortgage is repaid by the time you reach 70 years of age. Another interesting option is you can either pay your mortgage monthly or every other week.
The bi-weekly option allows you to repay your mortgage quicker and you pay less interest. This does of course mean your overall monthly repayment is more, but the benefit is you do get it paid off a lot quicker and with less interest over the term of the mortgage.
At First Caribbean International Bank, they also offer up to 95% financing for existing properties and in some cases up to 100% for land loan purchases. They also offer up to 35 years to repay up to the age of 35 as again the mortgage must be repaid by the time you are 70 years of age.
If you want to pay lump sums off your mortgage then this is allowed providing you give the bank 3 months notice and will not incur any penalty. Penalties are only incurred if you repay your mortgage within one year of taking out the loan and can often be two and half years before the prepayment penalty can be avoided. They also offer interest only mortgages, which can work out cheaper on a monthly basis and can work to your benefit if you plan on paying a lump sum at a later date.
When deciding how much you can afford to borrow, the banks in Barbados requires your monthly mortgage repayment be no more than 40% of your gross monthly salary. Therefore to buy a property for $600,000 Barbados dollars based on borrowing 95%, you would need to be earning at least $10,000 Barbados dollars per month.
The bank would also stipulate including your mortgage, credit card and other debts you are servicing can total no more than 50% of your gross monthly income and you have a minimum of 5% disposable income each month.
If you are looking to refinance on an existing property, the bank will ask you get a valuation of your home from a Real Estate agent and will need a balance on your existing mortgage. They will lend you up to 80% of the equity you have in the property. This will be treated as a separate loan and you can negotiate the interest fee on this type of loan depending on the amount borrowed.
On all mortgages the bank will charge of a fee of 1% at the closing of the sale and the person selling the property is responsible for paying the stamp duty to the government.
Butterfield Bank in Barbados have been known to run some good reduced rate mortgage offers as low as 6.75%, however these were not available at the time of writing (September 2008). They offer 95% mortgages and do not charge a penalty on early repayment if you give at least 3 months notice.
Barbados National Bank offers up to 100% financing on property and mortgage rates as low as 7.75% for over 80% financing and on less than 80% financing the interest rate drops to 7.5% for to a two year fixed mortgage. They also offer up to 35 years repayment. This is one of the best mortgage offers on the market at the time of writing (September 2008.)
Scotiabank offer 30-year mortgages and have an interesting option allowing you to repay up to 15% of your mortgage every year without incurring a penalty.
Other lenders in Barbados are Royal Bank of Trinidad and Tobago (RBTT) and the Barbados Public Workers Union Cooperative Credit Union who you would need to contact directly to find out about specific offers and products.