10 Tips Before Choosing A Mortgage Lender in Jamaica

September 12, 2021
mortgage lenders for homes in Jamaica

Mortgage loans are very common in Jamaica.

Many Jamaicans use it to purchase their dream homes. Actually, it’s the most common route to get to buy a house here, unless you’re cash rich.

Even though it is the expected way to acquire a home, not everyone likes the idea of the dreaded “monthly mortgage payments.”

That being said, if you find yourself questioning whether or not getting a mortgage loan is right for your current situation, consider these ten tips that can help guide your decision-making process. 

These are listed in no particular order, as each person’s situation is different and therefore, requires a different response.

 1. Shop around for a mortgage

This tip is most beneficial if you actually want to get a loan and will likely follow through with completing the process. 

Don’t just sign up for any company that offers you a great interest rate, as there may be other hidden fees or penalties that can come along with it later on in the process. 

Do your own research and find the best option possible to fit your needs and budget requirements.

 2. Having pre-approval helps immensely

Pre-approval is when a lender decides whether or not you would qualify before you buy anything, meaning they offer an estimation of how much money they would lend you based on their own examination of your current financial situation and credit history. 

This step can help immensely because it will give you a general idea of how much money you would be able to borrow, and can save time when actually buying the house.

3. Put 20% down on your new home

Many people do not realize that there is more than one type of mortgage loan available for consumers to choose from. 

If you are willing to put at least $JMD 1-2 million onto your new purchase, this could be the best option for you in terms of saving money throughout the process.

 4. Think about what kind of interest rate you can afford

Maybe you don’t care about paying a little extra each month on your bill just to get a better interest rate. 

In that case, it is likely more beneficial for you to get the loan with the lowest monthly repayment cost possible. 

However, if you have a steady income and can afford at least a slightly higher monthly payment for a couple of years of high interest rates, going after a mortgage loan with a lower interest rate could be more favorable in the long run. 

5. Having good credit will help tremendously

One main factor of determining your eligibility when applying for any type of home loan in Jamaica is usually your employment status and credit history. 

If you have a bad credit history, chances are you won’t be able to qualify due to potential risk factors associated with lending money to you.

However, if this number is high, many more options will be available for you to choose from. 

Therefore, it would definitely be in your best interest to work on improving your credit score before applying for any loan – even if the process takes time.

6. Be prepared for closing costs

When buying a house in Jamaica, there are many additional fees that go along with completing the transaction successfully. 

Hiring an attorney to review all of the paperwork and checking on potential legal requirements or restrictions can cost anywhere between $400-$800. 

Notary services, transfer taxes, filing fees, document fees and recording costs will also eat at your wallet one way or another depending on the value of the home purchase.

7. Understand the full cost of a 30-year loan vs. a 15-year loan

If you can afford to make higher monthly payments, choosing a shorter term for your mortgage will definitely save you money in the long run.

For example, let’s say you borrow $JMD 30,002,080 over a period of 30 years, and plan on making exactly the same payment each month to cover the interest and principal debt. 

In this scenario, when it is all said and done you would have paid $JMD 96,925,769 including interest when considering how much money was borrowed in total. 

However, if you only borrow that same amount but then pay double what was originally planned in monthly installments, after just 15 years, 100% of your original loan would be paid off and your total cost would only come out to $JMD 49,318, 919.

Therefore, it is highly advised to pay extra if this will allow you to be debt free a lot faster because you can avoid paying that much more money in interest charges.

8. Stay patient

Unfortunately, the process of purchasing real estate in Jamaica isn’t as simple as walking into a car mart and buying a new car. 

In fact, closing on the home purchase may not occur for months after all of the initial paperwork has been submitted. 

Furthermore, if selling any other type property or going through bankruptcy are going to have an effect on your ability to get approved, it could take even longer.

So make sure you have enough money saved up so you can cover all necessary expenses until the day finally comes.

9. Protect yourself against possible fraud

Even though you are likely to have enough money of your own for this type of purchase, many people have either lost their homes or been taken advantage of because they didn’t do their homework before signing onto mortgages. 

Basically, when dealing with any type of investment, it is always in your best interest to be as informed and prepared as possible.

Therefore, you will want to check the various Jamaican mortgage lenders and read reviews from past customers.

Any questionable activity could result in a loss of millions of dollars down the road if not handled properly.

10. Have fun and enjoy finding your dream home

Buying a home is definitely an exciting time in your life, so do yourself a favor and treat it as such.

When you begin to take this process seriously, that is when problems will start occurring that could ultimately affect your ability to purchase the house. 

Therefore, just relax and have fun!

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