“I’m desperate to buy a home as I’m tired of having to deal with landlords. I have some money saved up for the deposit and I’m going to go to a mortgage company for a loan. I’m a little confused as to the process involved in getting a mortgage. What can I expect from the process?”

Congratulations on making a move towards owning your own home. Having a deposit amount in hand is only the first step in achieving home ownership. The determining factor between getting your home and continuing to pay rent is- will you be able to get a mortgage?

Going to a mortgage interview can be a nerve-racking experience. You’ve finally found a place that you really want, you’ve agreed to pay your deposit to the vendor, and now you face the people who will decide whether or not you can qualify for the loan you need to close the deal. This can definitely rank high on the list of life’s most stressful experiences!

You can reduce this uncertainty by trying to find out exactly what the mortgage institution requires from you long before you start looking for a house. If you follow their guidelines to the letter, then you can feel more comfortable going into the mortgage interview.

As you’re a first-time home buyer, it’s important for you to check out the National Housing Trust (NHT) first to see what you’re entitled to. The NHT was designed to give all its contributors access to housing solutions and lower-interest loans. According to the NHT’s website at www.nht.gov.jm, to qualify for any NHT loan a person must:

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1.   Be between the age of eighteen (18) to sixty-five (65) years old;
2.   Be currently employed/self-employed;
3.   Make payments to the Trust at the rate of 2% or 3% of earnings
4.   Have at least 52 weekly contributions, 13 of which should have been made in the last 26 weeks immediately preceding the application date;
5.   At the time of application for a mortgage, have accounted for the last 3 years of working life, to the satisfaction of the Trust; and
6.   Earn no less than the minimum wage as specified by Jamaican law.

The next step is to visit or call the nearest NHT office to find out the loan amount that you qualify for based on your income. The maximum amount that the NHT will lend is J$3 million each to two persons purchasing a property.

If your mortgage need is greater than what is available at NHT, then you will probably have to go to a building society to obtain the balance of the loan.

There are currently four major building societies that offer mortgages in Jamaica. They are, First Caribbean International Building Society, Jamaica National Building Society, Scotia Jamaica Building Society and Victoria Mutual Building Society (VMBS).

Some of the building societies offer joint financing with the NHT. You can get a qualifying letter from the NHT, take it into the participating building society, and get both loans from one location.

I asked a representative of VMBS to explain what happens when someone comes in to request a mortgage. The first question you will face is ‘have you already found a property that you wish to buy?‘

The price of your desired home will determine how much you’ll be able to borrow.  VMBS will finance up to 95% of the cost of the property. The current limit on loan amounts for residential properties is J$25 million.

Your age is important as it will determine how long the loan repayment term will be. For VMBS, 65 years of age is the cut-off point for servicing loans. This means that a 60 year-old applicant could only get a 5-year mortgage. The company will give loans with a maximum of 25 years to repay.

You’ll also have to show proof of income to determine how much mortgage you can get. VMBS requires that your gross income should be at least three times the monthly repayment.

The interviewer needs to be convinced that you’ll be able to pay your bills and comfortably pay the mortgage too. You’ll also be asked about your debts such as credit cards and hire purchase. Information on your savings can also help the interviewer to make the final decision.

It’s a good idea to visit or call all the institutions to compare interest rates. Some have special savings packages that will allow you to get lower-interest mortgages, depending on how long you have been saving, and what percentage of the loan amount you have saved.

You can also ask for a pre-approved mortgage facility which will state the mortgage amount you qualify for, before you start house hunting.