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Purchasing Barbados property can be very time consuming and labourious without the help of a professional like Terra Caribbean. Terra Caribbean has been specialising in Barbados property sales for many years and as a consequence has gained a vast amount of experience.
The property sales process can be made much easier should you make the right contacts and work with credible professionals that will guide you not only to the best Barbados properties for your budget and lifestyle; but also take you through the steps to acquiring what is likely most buyers largest investment outside of their homeland.
Understanding the Barbados tax and legal structure, finding a suitable financial institution and eventually having a local entity to manage your property investment will all be made easier by appointing a Barbados sales agent you are comfortable with and trust to have your interests in mind.
Here are a few things you should know about the Barbados property market:
There are NO restrictions to non-nationals purchasing Barbados properties.
There are no special visas required and non-nationals are welcomed to make Barbados their home.
There are some simple procedures that involve Foreign currency being brought into Barbados, as well as funds borrowed by non-nationals which should be registered with the Central Bank of Barbados.
There is no Capital Gains Tax in Barbados so investors are not charged for the appreciation in the value of their property.
Transaction Costs:
Attorney Fees are approx. 1% - 2.5% plus 17.5% VAT
You will be expected to pay the proportionate amount of Land Tax
Standard Purchase Procedure:
Verbal offer and acceptance (in some cases a reservation agreement may apply)
Appointment of an attorney-at-law
Exchange of contracts for sale and payment of a 10% deposit to the vendor’s attorney-at-law within two to four weeks
Conveyance and payment of 90% remaining within three to six months (in the case of off-plan developments, stage payments based on construction progress may apply)
US Dollar Mortgage / Finance:
US Dollar mortgages are readily available to non-nationals and non-residents, from the offshore sector of the local banking industry. You would be best advised to contact these institutions for their exact terms and conditions, however here is an overview of what can be expected:
Between 60% - 70% LTV up to US $2.5 million
50% LTV in excess of US $2.5 million
Minimum loan value if approx. US $250,000
Amortization ranging between 5 to 25 years
Rate LIBOR plus between 2.5% to 4% - N.B. Rate can change based on market forces
Bank’s Attorney Fees are approx. 1% - 2.5% plus 17.5% VAT
Administration / Arrangement fees are generally 1%
Personal requirement include, but are not limited to:
Demonstrated foreign income stream must be provided to support repayment of mortgage (Job Letters / Income Tax returns)
Current valuation / appraisal on Barbados property you own
Current personal state of affairs, and if a company most banks require audited financial statement from a reputable Chartered Accounting firm.
Bank references
Total debt servicing ratio not to exceed 40%
Approval by The Central Bank of Barbados
Sales agreement and current valuation report on the Barbados property you intend to purchase
Two forms of Government issued identification
The institutions that offer US Dollar Mortgages are:
The Royal Bank of Canada
Scotiabank
FirstCaribbean International Bank
Local Barbados Mortgage / Finance:
When applying for a local Barbados dollar mortgage there are a few important points to note.
Most financial institutions require the following documentation:
Proof of identification such as Barbados ID or Passport
Confirmation of your residential address eg: utility bill
Job letter from your employer and a recent pay slip
If self employed you will have to present financial statements for the company
Bank statements, especially for new customers
Barbados property sales valuation
If you are building on the property or renovating then a contractor’s estimate
An agreement of property sale from the vendor selling the property (where applicable)
In general the terms and conditions for local mortgages are as follows (may vary among lending institutions):
Interest rates between 6 - 8.5%. This however, is subject to change based upon the local market. You can use our Mortgage Calculator tool to get a ball-park of what you can expect to pay each month.
Mortgage cover ranges from 95% of the total amount, however, some institutions do offer 100% coverage.
Housing Service Ratio (HSR) should not be more than 40% of gross personal income
Collateral
The property itself can be used as collateral to secure your mortgage
Full Life Insurance
Cash and Bonds
Terms can vary:
Up to 10% deposit required
Up to 35 years to repay
Generally lending institutions require that mortgages be repaid before you reach 70-years of age. This means that your mortgage payments and term will be are calculated depending on your age and the number of years before you turn seventy. However; there is flexibility with most institutions and it is always better to meet with a mortgage financer regardless of your age; to determine the term of your loan.