Overview of Home Mortgage Process 101 | Stage 1
Stage One: Pre-Qualify for a Mortgage Loan
This is the first of three articles on how to apply for a mortgage in Trinidad & Tobago.
Buying a home is a huge financial commitment and can be daunting, especially for a first-time buyer. Unless you are lucky enough to be a cash buyer, which is rare, you will need a loan from a bank or other financial institution. This loan that allows you to buy your new home is called a mortgage.
Before you start house hunting, it’s always a good idea to work out what you can afford to spend on buying a new home. This is where your bank or other mortgage provider can help.
Set out below are the different stages of the mortgage process, as well as the conditions and documents required to secure a mortgage in Trinidad and Tobago:
Step 1 | Meet with a mortgage specialist of a bank or other mortgage provider (the lender) who will ask you a series of questions about your financial situation such as your monthly income and expenses. They will also do a credit check on you, to determine how much they would be prepared to lend you to purchase your new home. This is known as the pre-qualification process.
Step 2 | Once you have found a home within your budget, you will need to complete a mortgage application and provide documentary evidence of your income and specific expenses to the lender. See the list of documents set out below. If your application is accepted, the lender will provide you with a binding mortgage offer for you to accept.
Remember that you are negotiating two transactions at the same time. The first being the mortgage, and the second, the purchase of your home, and both work within the same timeframe, as detailed below:
Mortgage Aspect Real Estate Aspect
Get pre-qualified (to ascertain your budget) Then speak with a real estate Agent
Apply for your mortgage After selecting a property within budget
Review and accept the mortgage offer Sign Sale Agreement & pay deposit
Sign Mortgage Deed Sign document transferring ownership
Pass loan cheque to Attorney/seller Make final payment and close purchase
Register your ownership, pay duty & fees Move into new home
To qualify for a mortgage you should:
- Be at least 18 years old.
- Be a Citizen of Trinidad & Tobago (non-nationals may also qualify).
- Be buying property in T&T.
- Have regular monthly income, or be self-employed.
- Hold a good credit rating and history.
A lender will seldom lend you 100% of what you need to purchase your new home. So find out how much cash you personally will have to contribute to:
- Make the down-payment on the property (usually 10% of purchase price).
- Pay the lender’s costs/fees.
- Pay for a formal Valuation Report.
- Pay annual premium on house insurance.
- Pay any costs associated with the purchase, such as legal fees & stamp duty.
Documents required when you meet with the lender’s mortgage specialist to apply for your loan :
- Photo ID such as your passport, ID card or driver’s permit.
- Proof of your address such as a utility bill.
- Your bank, credit card and loan statements for last 6 months.
- Statement from any savings and deposit accounts for the last 6 months.
- If employed, pay slips for the last 3 months and a job letter from your employer, dated and stamped confirming your current pay package in addition to the above-mentioned documents.
- If self-employed, financial statements or income tax returns for the past 2 years in addition to the documents detailed in points 1 to 4.
Note that each lender may vary slightly in terms of the documents they ask you to provide as a borrower.
The second article will deal with the formal application for a loan, having found a home you want to buy.
AREA is currently the Governing Body of the Real Estate industry in Trinidad and Tobago, established under Section 2 of the Association of Real Estate Agents (Incorporation) Act, 2012.