Saturday, July 12, 2008

Buying Real Estate in Jamaica - Mortgage Costs

Since the issue of mortgage costs was raised in my last post I have decided to address it in more detail.

Many prospective purchasers are unaware that it costs to borrow money. Apart from the duties and other fees payable on the transfer of property, there are duties, fees and other costs payable on the mortgage side of a real estate transaction.

These include:

  1. Commitment Fee – payable to the mortgage institution starting at 1%. Some institutions like Victoria Mutual Building Society and Jamaica National Building Society have employed the marketing strategy of waiving these fees.
  2. Attorney’s Fee – payable to the attorney who prepares and advises the borrower on the terms of the mortgage instrument; this can start at 1% of the loan amount and do not forget to add General Consumption Tax (GCT) which is currently 16.5%.
  3. Stamp Duty – payable on the mortgage instrument itself, it amounts to 0 .625% of the loan amount.
  4. Registration Fee – payable to the National Land Agency to register the mortgage on the title; it amounts to 0.5% of the loan amount.

In addition to the above, since the mortgage institutions will require that you have the property surveyed and valued you will incur costs charged by the valuator and the surveyor. In some cases the mortgage institution will incorporate the fees/charges in the loan but this is only possible if the borrower qualifies for that increased amount. If not a purchaser will have to budget for these sums, in addition to the deposit and closing costs on a transfer, when considering purchasing a home.