HOME OWNERSHIP IN JAMAICA UNDERSTANDING THE MORTGAGE PROCESS

Presented by:Michael Hall

WHY WE ARE HERE:

• To advise on how to navigate the home buying process

• To identify the steps necessary to achieve the goal of home Ownership

What are some of the Benefits of Home Ownership?

• Pride of Ownership• Security• Diversification• Build Wealth• Build Good Credit

Home Ownership

• Usually starts with a Dream or Desire…

• Home ownership should be A WELL ORCHESTRATED PLAN from the moment you have the capacity to start thinking about your future.

Home Ownership

How So?• Making this all important decision which may

be the single largest asset acquisition in your life requires you to consider where you are in your financial life cycle.

The answers to each of these questions will determine your approach to your planning process.

Where are you?

• Are you a student? • Have you just started your working career? • Are you married/single?• Do you have children? What are their ages?• Have you been working for a while? Have you

been saving? Pay yourself first• Are you close to retirement?

Have a Savings Plan• Saving is important, it makes all your plans possible.

Organize your savings plan around specific objectives.

• Invest in yourself first. Complete your education; develop your skills and expertise. Make yourself marketable and in demand. Your income will grow.

• The costs associated with the acquisition of a house can usually be minimized if you SAVE.

• You and only you control your access to your dreams.

What do we look for?• Victoria Mutual Building Society has simple

requirements when considering your application:

• Ability to Pay – This is determined by where you are in your life

cycle and how much you invested in yourself• Attitude to Debt – Did you pay your bills in the past

Be PreparedWhen it comes to Homeownership – it isimportant to BE PREPAREDThe One Off Costs:• Deposit – 10% - 15%• Credit Report Fee• Processing Fee – $0 with VMBS• Professional fees (valuation, surveys, transfer

and mortgage costs, etc) between 10%-15%

Be PreparedThe Recurrent Costs & Responsibilities of HomeOwnership• Principal and Interest (P & I) Monthly Payment• Compulsory Savings (Home Saver)• Repairs & Maintenance• Property Insurance• Property Taxes

Access your Financial Resources

For your down payment

Down Payment Sources• Savings• Gifts or Loans• Joint Purchaser

For your monthly payment

Monthly Payment Sources• Salary• Savings

Your Credit Report

• Required for all Borrowers

• A numerical snapshot of the information in your credit report

• Used to assess your credit worthiness

• Scale ranges up to 999

• Lenders like VMBS want to see high scores--the higher, the better!

Improving your Credit Score

• Maintain or improve payment habits

• Repay collection accounts and other outstanding debts

• Reduce total debt

• Avoid taking on new unnecessary credit

• Keep revolving debt well under the credit limit

• Correct credit report errors

Your 1st House Does Not Have to be your Dream House

• You don’t need to buy your perfect house as your first purchase:– Start small and build equity–Which can be used later to buy what you

want so, start with what you need and as you progress through life, go after what you want.

Where can you get a Mortgage Loan?

• Victoria Mutual Building Society - our representative are here, come talk to us

• Joint financing available with the National Housing Trust (NHT)

Why VMBS?

• Lowest Rate – 8.5% on JMD; 4.25% on GBP/USD

• 25% Discount on valuations done through VM Property Services

• No Processing or Commitment Fees

• Best support from start to finish

• Dedicated and knowledgeable Staff

• Beneficial Partnerships to minimize the costs to you

• 15% Discount on Motor Insurance through BCIC

We Have the Best Mortgage Offering in Jamaica!

UnderstandingThe Home Acquisition Process

• Save, save, save• Come in and talk to us!• Search for your ideal property (VMPS)• Approval Process & Schedule:– File prepared– Loan reviewed and approved– Mortgage registered– Collect your keys

NB – Own your Home in Jamaica Brochure

How Much Can I Borrow?

Is dependent on the following:• Down Payment amount• Loan-to-value (LTV) ratio• Debt-to-income (DSR) ratio

Loan-to-Value Ratio

• We will lend up to 95% of the Purchase Price/Value of the Property in Jamaican Dollars.

• We will lend up to 90% of the Purchase Price/Value of the Property in Sterling Pounds Loans

Example:• The property appraises or sells for $15,000,000

• LTV - $15,000,000 x 0.95 = $14,250,000

• $15,000,000 converted to STG @$170.00= £88,235.00• LTV - £88,235.00 x 0.75 = £79,412.00

Debt-to-Income Ratio

• Total monthly debt payments vs your gross monthly income

• The lower your non-mortgage debt, the bigger the mortgage you can qualify for

• Total debt (mortgage, credit cards, car loans, etc.) to equal no more than 33% of gross income

• Strong net worth and availability of cash may allow a higher ratio (up to 45%)

PURCHASING LAND• We lend up to 70% (LTV)• We currently do not lend for construction.

KEY POINTS TO REMEMBER• Location, Location, Location

– Where is the property?– Have you investigated or visited the area (remember the area that

you left may have changed substantially).– Is it safe?– Is there easy access to roads, water and electricity?– Proximity to medical facilities, groceries, markets, other amenities.

• IS THERE A REGISTERED TITLE

Monthly Payment CalculationsDescription Jamaican Dollars Sterling Pounds

Purchase Price $15,000,000.00 £88,240.00

Deposit (10% / 25%) $1,500,000.00 £22,060.00

Loan Amount $13,500,000.00 £66,180.00

Closing Costs $1,500,000.00 £8,830.00

Total Cash Outlay $3,000,000.00 £30,890.00

Loan Tenure 20 years 20 years

Interest Rate 8.5% 4.25%

Monthly Payment (P&I) $136,000.00$151,000.00 (Inc. Mthly Home Saver Commitment)

£520.00

Meadows of Irwin, Montego Bay

www.wihcon.com

MILAN3 Bed, 2 Bath – 1049 sq ft J$12,590,300.00/£70,602.00

VERONA2 Bed, 1 Bath - 882 sq ftJ$10,606,076.00/£59,475.00

TUSCANY2 Bed, 1 Bath - 658 sq ftJ$8,487,664.00/£47,596.00

Coral Springs Village, Trelawny3 bedroom, 3 bathroomJ$12,150,000 /£68,135.00

2 Bedroom, 2 bathroomJ$10,150,000/£56,920.00

2 Bedroom, 1 BathroomJ$7,975,000.00 / £44,720.00

* SUBJECT TO ESCALATION

PHASE 33 bedroom, 3 bathroomJ$15,120,000 /£84,787.00

LotsJ$3,500,000.00/£19,627.00

www.goredevelopments.com Minimum deposit of 5% and Gore’s closing cost of 3% must be paid upfront

THE ROYAL – 3 bedroom, 3 bathroomJ$16,500,000 /£95,525.00

Drax Hall Country Club, St Ann

THE VISTA – 2 bedroom, 2 bathroomJ$12,750,000 /£71,500.00

THE CRYSTAL – 3 bedroom, 2 bathroomJ$15,500,000 /£86,920.00

www.kemtekjahomes.com

Cool Shade, Richmond, St Ann

www.richmondjamaica.com

3 bedroom, 2 bathroomJ$21,840,000.00 /£122,470.00

Corner UnitsJ$23,340,016.00/£130,881.00

APARTMENTS2 bedroom, 2 bathroomJ$15,120,000 /£84,787.00

* SUBJECT TO ESCALATION

New Harbour Village, St. Catherine

www.goredevelopments.com

2 Bed, 2 Bath – 933 sq ft; Lot – 4600 sq ftJ$10,000,000 /£56,076.00

2 Bed, 1 Bath - 840 sq ft; Lot – 4000 sq ftJ$8,500,000/£47,665.00

2 Bed, 1 Bath - 650 sq ft; Lot – 3580 sq ftJ$7,150,000.00 / £40,095.00

• SUBJECT TO ESCALATION

• Minimum deposit of 5% and Gore’s closing cost of 3% must be paid upfront

Caymans Country Club, St. Catherine

3 Bedroom, 2 BathroomJ$15,900,000.00/£89,161.00

2 Bed, 1 Bath J$12,700,000/£71,217.00

www.neh2000.com

Pre-qualification

• This is an estimate of how much loan funds you might qualify for. Please note - it is not a firm commitment.

• Pre-qualification is a way for hopeful homebuyers to avoid unpleasant surprises. In a competitive housing market, showing a buyer that you are pre-qualified for a loan can give you an advantage over other prospective buyers who do not have financing lined up.

When Making an Offer (Important Information to Remember)

• Property address (location)• Offer Price• Down Payment • Financing Terms• Closing Costs• Closing Date & Possession Date• Expiration of Offer• Contingencies

What are Contingencies/Additional Costs

• Financing: Loan funding (Construction)

• Appraisals– Valuations– Surveyors Report

• Insurance

• Title (clear & marketable)

• Inspections– Building/structural– Pest/termite– Environmental

hazards/lead paint– Soil– Flood

Negotiations

After considering your offer, the seller may:• Accept• Reject (be prepared)• Counter offer (be prepared)

What to Expect from VMBS

• Good Faith Estimate• Truth-in-Lending Statement

(pre-qualification letter)• Personalized No HASSLE SERVICE• Best support from start to finish• Dedicated and knowledgeable Staff

Successful Home Ownership

• Avoid risky loans• Make mortgage payments on time• Stay current on property taxes• Maintain adequate insurance • Keep the home in good repairs• Keep an emergency fund ready• Avoid borrowing against the equity in your home

for consumer purchases• Seek help at the first sign of trouble

THANK YOU FOR YOUR PARTICIPATION

Visit HTTP://WWW.VMBS.COM

For additional information on creating a savingsplan and mortgage information please contact me at Email: Michael.Hall@vmbs.com | Tel: 020 7738-6799 | Mobile:075 0855-6888