JN relaunches graduated mortgage
JN Bank Limited has reintroduced a mortgage product intended to capture the interest of professionals at the early stage of their career, by offering lower loan repayments that later increase as their earnings grow.
Saniah Spencer, the marketing and product development chief for JN Bank, said Friday that the loan product is mainly intended for young members of the workforce.
The graduated mortgage has been a long-standing product of the bank, from its building society days, but is now being reintroduced to the market under the 'Design your Mortgage Campaign', which kicked off this month.
"The graduated payment option is not new; however, JN Bank is making it easier for younger individuals to acquire a mortgage to purchase a home," said Spencer.
Asked about the level of portfolio growth expected from the initiative, she sidestepped the question, while reaffirming JN as the leading provider of mortgage loans in the private market.
Qualifying applicants, the banks states, are likely to be individuals and families who expect increases in their future income. They must also be first-time homeowners.
Spencer said research shows the average young professional earns between $100,000 and $500,000 monthly, and may be able to afford a mortgage with a minimum value of $10 million. The monthly mortgage payments would be about $73,000.
Under the graduated, payments on a 30-year mortgage for that $10 million property would start at around $62,089 in year one and move up to $71,403 in year two, she said
As to adjustments in the interest rate and loan terms as time progresses, Spencer said "changes in mortgage payments are determined by the agreed graduated period".
Addressing the concern of individuals who might be increasing their expenses as they grow older, when the reverse is desirable, Spencer said that this was factored into the design of the product.
"The period in which graduated payments are allowed is taken into consideration in evaluating the risk of increased expenses," she said.