Benefits
The mortgage market in Cayman is similar to other countries. Interest rates are negotiable and can range from 1 per cent to 3 per cent above the base rate (New York Prime). Both variable and fixed interest rates are available.
Standard mortgages will require a down payment of between 5 and 30 per cent. The typical down payment is around 20 per cent and lower equity mortgages may require mortgage insurance.
Interest only mortgages, as in other parts of the world, are not offered in the Cayman Islands.
Lenders offer mortgages for a time-period of 10 to 25 years. Some, but not all, banks charge a penalty for early repayment.
To determine the terms of the mortgage several factors are taken into account by the lender. These include the profession, salary, employer and credit history, as well as the immigration status, ie lenders offer different terms for Caymanians and expatriates.
A key issue in determining mortgage terms is, of course, the ability to repay and the debt service ratio of the borrower - the debt service as a percentage of salary. The common threshold for a maximum debt service is 45 per cent. The bank will also consider how long the borrower has been in the current employment. The age of the applicant, overall financial position and credit history with the lender will also be factors.
Charges
Mortgages in the Cayman Islands are subject to a stamp duty on the total amount borrowed. A 1 per cent stamp duty is applied to mortgages of less than CI$300,000 and 1.5 per cent stamp duty is charged for mortgages of CI$300,000 or higher.
This will come in addition to legal fees of 0.5 to 1 per cent of the loan amount and bank arrangement fees of 0.5 to 1 per cent on the cost of the mortgage, depending on the amount, overall application and relationship with the lender.
A stamp duty also applies to the purchasing price of the property and ranges from 4 per cent to 7.5 per cent depending on the location and whether the buyer is Caymanian or not.
Process
It is advisable to shop around for a mortgage with several lenders and determine which will offer the best deal. The only way to do this is to arrange a meeting with each lender’s mortgage advisors.
The process for applying for and obtaining a mortgage is very straight forward. If a mortgage application is complete, most lenders will process it within one week.
Mortgage lenders:
- Butterfield Bank (Cayman) Limited.
- Butterfield Investment Services
- Cayman National Bank Ltd
- Civil Service Association Co-Operative Credit Union
- Fidelity Bank (Cayman) Limited
- First Caribbean International Bank (Cayman) Limited
- HSBC Bank (Cayman) Limited
- Royal Bank of Canada
- Scotiabank & Trust (Cayman) Ltd