NASSAU, BAHAMAS — Scotiabank Bahamas has launched a new appeal for persons planning on homeownership to begin their preparations well in advance.
According to the bank, no matter how far into the future homeownership may be, there are some important steps that potential buyers should consider when contemplating the purchase of a home.
Na-amah Barker, director of retail banking, advises individuals to make informed, cautious decisions by researching the mortgage process and ideal neighborhoods and confirming their budget via a pre-approval process before they begin their home search.
“The transition from renting to buying is a big step, and there are many moving parts along the way,” the senior Scotiabank executive noted.
Affordability
Barker advised that having a sizeable deposit can help to reduce monthly obligations.
“We generally urge customers to have as large a down payment as possible as this reduces the amount that they will have to pay on a monthly basis,” she explained.
“For many persons, having a dedicated savings arrangement can greatly assist in the process of accumulating sufficient funds.”
Affordability is also another consideration that buyers should take into consideration. A good “rule of thumb” is that not more than 50 percent of what a potential mortgager earns should go towards servicing their debts, Barker advised.
“Pre-existing debts, along with the expected value of the mortgage facility, are used in the calculation of affordability, and so where this falls within 45 percent, then it is more likely that the bank will extend an offer to the potential mortgagee.”
Potential homeowners should pay keen attention to their credit history and manage existing debts, especially during the current pandemic.
“Communicate with your creditors if you are experiencing challenges, delay taking on new debts that may affect your ability to secure a mortgage and try to secure payment arrangements that will allow you to meet your obligations without damaging your credit,” she urged.
Homeowner expectations
Another major consideration people can anticipate as they transition from renting to buying, Barker said, are the associated costs.
Typically in The Bahamas, the immediate costs associated with purchasing a home are value-added tax (VAT); legal fees, which can be on average 2.5 percent of the purchase price; and real estate commission, which is applied at six percent on improved property and 10 percent on vacant land.
As a homeowner, in addition to a monthly mortgage payment, there are property taxes, mortgage insurance and any other fees associated with the upkeep of the residence. These must be considered as part of the long-term financial planning process for homebuyers.
Preparing financially
Barker emphasized that preparation remains the most critical part of the process and that individuals should not “wait until they identify a property” to begin preparing for homeownership”.
Once ready to commit to a home purchase, interested individuals can visit Scotiabank’s website to get more information on special deals being offered.
Currently, Scotiabank provides customized support for potential buyers, which can begin from as early as the goal-setting phase.
“Our mission is to enable customers to reach for and attain homeownership goals through disciplined preparations and long-term planning,” Barker said. “Persons should be patient and seek advice from a real estate professional and a mortgage banker before making any decisions.”
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