Oran Hall | Buying real estate in Jamaica from Canada
QUESTION: I just wanted some advice, maybe you can help. I am Canadian-born and I would love to purchase a house in Jamaica. I recently received my TRN [Taxpayer Registration Number] and I wanted to know how I can bill my credit in Jamaica. As well, would I have to get a mortgage in Jamaica or can I get one in Canada to purchase it in Jamaica? How much of a deposit would I need to have or does Jamaica offer no downpayments?
FINANCIAL ADVISER: If you are able to meet the requirements of the mortgage-lending institutions, you can get funding in Jamaica to purchase a residential property here. It would be left to Canadian mortgage-lending institutions to determine if they would lend you money to purchase a property in Jamaica.
What I am presenting is based on information from two local mortgage-lending financial institutions. Although there are several similarities, there are some differences in the facilities and the requirements of the institutions.
In certain circumstances, mortgage-lending institutions will lend up to 95 per cent of the purchase price of the property or its appraised value, whichever is less, but a limit of 90 per cent is more common. Not all borrowers would necessarily qualify for those levels of financing.
Buyers would be required to find the difference between the amount of funding they are able to source and the agreed purchase price of the property, but it is quite possible that some vendors may require a deposit that is higher than 10 per cent of the value of the transaction - up to 15 per cent.
Contact the lender
You should first make contact with the lender which will assign an officer to advise you and guide you through the process of applying for the loan to the point of conclusion. The first step, though, is pre-qualification.
To facilitate pre-qualification, you would be required to submit documents such as a job letter, your three most recent payslips, a valid identification, your TRN or Canadian Social Insurance Number (SIN) and, in one case, tax returns for the last two years and a credit score of 690 or higher. Your credit history in Canada is, therefore, very important. Pre-qualification is also important as it determines how much you can borrow and thus what you can buy.
You are ultimately responsible for identifying a suitable property. It is advisable to use the services of a reputable real estate agent or company or a reputable attorney-at-law or legal firm to assist you.
Once you have satisfied yourself that you want to purchase a particular property, you should make an offer to the vendor either directly or through your representative.
Ultimately, ability to pay is what determines if you succeed in getting the loan and how much, so factors such as age, income and whether the loan is for a housing unit in a new development or is open market are important. The 95 per cent funding applies to new developments by specified developers. Open market loans are defined as loans for properties that are already owned and occupied. The maximum level of funding is 90 per cent.
Mortgages are required to be paid off by the time the mortgagor is 70, but one company lends for a maximum term of 40 years and the other 32 years. There are variations in the rates. In one instance, the rate on Jamaican dollar loans is 8.5 per cent, but in the other it is 8.5 per cent for loans up to $20 million and 9.29 per cent for any portion above that amount so, for a loan of $25 million, $20 million would be at 8.5 per cent and $5 million at 9.29 per cent.
With regard to foreign currency loans, the rates are as follows: US dollar, 4.0 per cent and 4.5 per cent; Canadian dollar, 4.5 per cent and 5.0 per cent; and pound sterling, 4.5 per cent and 5.0 per cent. The rates of the other lender are US dollar 5.25 per cent; Canadian dollar 5.0 per cent; and Sterling 6.0 per cent.
It is not absolutely necessary for you to visit the financial institutions personally as the entire process can be done remotely, but it would make sense for you to satisfy yourself that what you are buying is, indeed, what you want and what has been presented.
- Oran A. Hall, principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel.