Caribbean

Mortgages in the Caribbean

The Caribbean is a true drop of Paradise. There are 41 different islands located in the glittering Caribbean sea, each with their own history and culture. A playground for the rich and famous, you could dive a coral reef or a shipwreck one day, shop designer labels the next day, and sip margaritas by the weekend. With such a strong tourism industry, property in the Caribbean often appeals as both a personal holiday home and a vacation buy-to-let as a source of income.

What do I need to know about mortgages in the Caribbean?

Although there are some myths that non-residents can’t buy property, this is untrue. You will however, be offered less favourable mortgage terms. The financial market is largely unregulated, and rules differ from island to island. 

To avoid wasting time and effort, follow this process:

• Choose the island where you wish to buy (as each will have different requirements and processes)
• Decide on your budget
• Speak to a mortgage broker to secure an agreement in principle
• Then start searching for your perfect property

Property in the Caribbean often moves slowly. Your real estate agent may be keen on you snapping something up to avoid missing out, but don’t rush or skip over your due diligence. Do your research.

How much can I borrow?

Generally, mortgages will be offered in US dollars. You will usually be able to borrow up to 75% of the value of the property at most - some lenders may offer only 60-70%. Caribbean residents may be offered up to 80% of the value of the property.

Caribbean lenders will need to see your savings, credit history, income and outgoings to make a decision. As a guide, they’ll only allow up to 35% of your income to be committed to debt, so if you already have mortgage commitments on another property, it will limit the amount you’re able to borrow. However, depending on your financial situation, there may be some flexibility in this for some borrowers.

In general, non-residents may be offered up to a 15 year term, and residents may be offered up to a 20 year term.

What kinds of mortgages are available?

There are a wide range of mortgages available in the Caribbean. A broker will be able to secure the best deal for you - from interest-only, to variable or fixed rate terms. Many lenders don’t offer penalties for early repayment, which is perfect if you expect your financial position to change. 

Non-residents will be offered higher rates of interest, around 3% above the US$ LIBOR rate set in London each quarter.

The mortgage market is largely unregulated and can be difficult to navigate. It's highly recommended to use a broker.

What documentation will I need to provide?

You’ll need to provide the following to a lender:

• Proof of identity (such as a passport, driving licence, or other suitable photo ID.) Some lenders will require two forms of identity.
   
• Proof of address (including utility bills or bank statements etc). These must be dated within the last 3 months. Again, some lenders may require two pieces of documentation.
   
• 12 months’ evidence of payment for your existing mortgage or rent. This is to confirm your outgoings.
   
• Proof of deposit (a bank statement of a savings account).
   
• Bank statements (two months’ worth to confirm your regular outgoings).
   
• Property details (copy of sales particulars, or sales contract).
   

How long does it take to arrange a mortgage in the Caribbean?

Receiving your agreement in principle is generally pretty quick - you could have an answer within two business days. For the final application, it can take six to eight weeks from application to approval.

If you need planning permission or other involvement from the local government, be prepared to wait. Bureaucracy can be slow, painful and confusing.

What else do I need to know about mortgages in the Caribbean?

Like in most countries, you need to arrange buildings insurance for the property, and it needs to be in place for as soon as the mortgage completes. Weather in the Caribbean can be extreme, with hurricanes common on some islands. Therefore insuring your property isn’t just a “theoretical” protection of your investment. 

You will need a Caribbean bank account from which to pay back your mortgage. This needs to be opened before the mortgage application completes. You will find this bank account useful for other local bills and taxes. 

Missing mortgage payments is taken very seriously. You may wish to take advantage of services that debit a fixed amount from your UK bank account to your Caribbean bank account each month to ensure your mortgage payments are always made on time. 

During the sales process, the lender will arrange their own legal representation to communicate with your lawyer. Unfortunately, the buyer is liable for these legal fees as well as their own.

Get your mortgage in principle certificate in 5 minutes

Choose Your Own MortgageSpeak To An Adviser

Can anyone buy in the Caribbean?

Yes, non-residents can buy property in the Caribbean and use local lenders for their purchases. However, some lenders and some brokers will have limitations on which islands they can secure finance for. It is recommended you speak with a broker early in the process.

And finally... beware of the weather!

The weather in the Caribbean is hot, but varies from island to island. If you have a vision of sitting outside and enjoying the view without running indoors for the air-con, check how breezy the area is, including around the property and its grounds.

Check how well the property will withstand a flood, especially if you’re in a high-risk hurricane area. Even if you’re not in the hurricane belt, make sure the property is hurricane-proof, as hurricanes don't know they're supposed to stay in their lane. Repairing property can be not only costly but very time-consuming, thanks having to wait for deliveries of building materials to the island.

Properties near the sea will need more maintenance thanks to the impact of salt water.