Mortgage Financing

How to Qualify for Mortgage Financing in Trinidad and Tobago

When applying for a residential mortgage loan, the prospect purchaser would need the following information:

	Sources of income
	Documents required to process loan
	Loan criteria
	Closing charges
	Interest rates
	Terms of loan

SOURCES OF INCOME

When you’re applying for a residential mortgage, the first step is to present evidence of your income. If your spouse is also employed, she/he will also have to do the same.

Income may be classified as:

	Salary (certified by employer)
	Profit from business (substantiated by financial statements)
	Commissions
	Investment income (e.g. Mutual fund investments, stocks and shares)
	Income for property rentals
	Traveling and cost of living allowances

The reliability of your earnings will be assessed primarily to establish that there is a sustained level of income to meet the mortgage payment.

Self-employed persons need to have their books audited by a registered accountant for at least two years.

In addition, your net worth is assessed and you are to provide a list of your assets and liabilities.

Assets	Liabilities
Cash in hand or in the bank	Outstanding Loans
Stocks & Bonds	Outstanding credit card balances
Mutual Funds	Mortgages
Land	Money you owe people
House
Household items
Money people owe you

DOCUMENTS REQUIRED TO PROCESS LOAN

	Identification (Passport or ID Card)
	Job Letter
	Most recent pay slip
	Statement of savings/Bank statement
	Proof of source of Deposit
	Insurance (Fire/Life/Hazard) if applicable
	Mortgage Indemnity Insurance (if applicable)

LOAN CRITERIA

	Permanently employed for at least (2) years or qualified professional
	Citizen of Trinidad and Tobago
	Mortgage installment -- not to exceed 30% of income
	Debt servicing ratio (i.e. mortgage payments plus all other loan payments) -- not to exceed 40% of income

CLOSING CHARGES

In addition to the 10% deposit, you would also need an additional 3%-5% of the value of the property to cover closing charges and fees attached to mortgage loan transaction.

The breakdown as follows:

	First month's installment
	Application fees
	Management fees
	Title Search fees
	Legal fees
	One year’s fire/hazard insurance premium
	Mortgage Indemnity Insurance
	Valuation Report fee
	Stamp Duty (for properties valued over TT$350,000.00)

INTEREST RATES

Interest on residential mortgage loans varies from time to time depending on market conditions.

If your mortgage loan is required to finance the acquisition of a property, or to meet the cost of building your home, your interest will be based on a prime residential rate.

If the purpose for your loan extends beyond the acquisition, construction and improvement costs, a higher rate will usually be applied.

Term and Monthly Installments

Monthly payments on loans are calculated per TT$1,000.00

Rate	15 years	20 years	25 years	30 years
MORTGAGE FACTORS
8.0%	9.56	8.35	7.72	7.34
8.5%	9.85	8.68	8.06	7.69
9.0%	10.15	9.00	8.40	8.05
12.0%	12.01	11.02	10.54	10.29
13.0%	12.65	11.72	11.28	11.07
13.5%	12.99	12.08	11.68	11.46
14.0%	13.32	12.44	12.04	11.85
14.5%	13.66	12.80	12.43	12.25

Here’s how it works:

	To calculate the installment for any given loan amount, use the table above.
	Multiply the respective mortgage factor by the loan amount and divide by 1,000.

Example: To calculate the installment on a loan of $300,000.00 for 30 years at a rate of 12%:

TERMS OF LOAN

A residential property mortgage loan is secured by a mortgage charge, which essentially means that your property serves as the collateral for your mortgage.

Property in all geographic areas in locations within the Republic of Trinidad and Tobago may be acceptable as security on loans.

The property must, however, meet regulatory requirements (i.e. completion certificate, land and building taxes) and satisfy professional and market standards (e.g. marketability).

There must also be planning and regulatory approvals and infrastructural services, such as roads, electricity, water, telephone and other utilities.

You should have these documents:

	Completed application form
	Agreement for Sale/Letter of Offer
	Evidence of savings
	Evidence of loans
	Valuation Report from a Valuator approved by the Financial Institution
	Title deed to property
	Receipts for rates and taxes
	Clearance certificate from the Water and Sewage Authority.

The following are also required for construction loans:

	Quantity surveyor’s report from a Surveyor approved by your Financial Institution
	Detailed builder’s estimate
	Approved plan

Residential mortgage loan are generally repaid over a period not exceeding 30 years.

If a residential property is leasehold, the mortgage must be repaid before the lease expires.

It is normally required that a residential mortgage loan be paid off before the principal borrower’s 60^th birthday.

Installments on residential mortgage loans are paid on an amortized basis (partial payments of the principal at regular intervals) which, for most salaried borrowers, is the most cost-efficient and convenient way of borrowing.

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