January 7, 2013
Mortgages, Financing and Loans what you will need
When considering the possibility to request financing at a banking institution in Sint Maarten, the primary element that will be taken into consideration is whether the applicant is “resident” or “non resident”.Also learn more about St. Maarten Property Taxes & Real Estate agencies , Notaries, Architect, and Engineers
An individual is considered “Resident” if he/she complies with either requirement:
– She/he holds a residency permit from Sint Maarten
– She/he is Antillean.
The following requirements are applicable to Property (Land or Home) loans.
If employed by a company:
– Job letter
– 2 last months pay slips
– Copy of Sint Maarten Identification Card
– In case of Non-national: proof of valid residency or work permit
– Permanent residency is required for house loans
If self employed:
– Last 3 years financial statements
– Copy of Sint Maarten Identification Card
– Articles of incorporation
– Extract from the Sint Maarten Chamber of Commerce less than 6 months old
– If income generated from rental need to provide bank with lease agreements
– Verification of address such as utility or telephone bill
– Last 6 months statements for all outstanding loan(s)
– Last 6 months statements of your savings or checking account(s) or deposits
– Credit cards (if any, need to know limit on card(s)
– Employer must be willing to agree to a salary deduction or salary assignment
The requirements and necessary documents also apply to non-resident applicants.
However in addition, non-resident applicant will need to provide the bank with their last 3 years income tax return forms and a credit report.
Loans for non-resident applicants usually follow the following terms:
– Deposit of 30% minimum
– Repayment over a period of 15 years maximum
– Interest rate currently at 9%
FOR ALL APLICANTS
1- Appraisal report: an appraisal report less than 6 months old and addressed to the bank must be provided. In the event the property is considered a real estate investment that will generate rental income, estimated rental income must be included in the appraisal report.
Depending on the bank, the applicant might be required to request such report from a specific engineer the bank is currently working with. However generally speaking, the following offices are renowned in Sint Maarten and will provide reliable assistance with the document needed:
Independent Consultant Engineering (I.C.E.) – (Tel):+1721-542-2421
St.Maarten Housing & Planning – (Tel.):+1721-542-2121
David Morrison & Associates – (Tel.):+1721-542-2719
IXI Design N.V. – (Tel.):+1721-542-6028
2- Signed Sale and Purchase agreement indicating the terms of transfer
3- Proof of deposit as indicated in the sale and purchase agreement and presented to the Notary’s Office in charge of the dossier
4- In case of a construction loan a copy of the deed of ownership of the parcel of land on which the construction is to be completed
5- Certificate of admeasurement of the property
6- Agreement and/or construction estimate signed by the licensed contractor and broken down in the various construction stages
7- Land loan: The down payment requested towards the purchase of a parcel of land is a 10% minimum. The loan can be applied for a maximum of 15 years at an interest rate of approximately 7%, that can be negotiated depending on competition offers.
8- Residential Mortgage loan: The down payment for a residential mortgage loan can range from 5% to 20% depending on the collateral (30% to 40% for non-residents), guarantees offered by the applicant and on the applicant’s debt ratio. For all banks, the applicant’s debt ratio must be inferior to 1/3 of his total monthly income.
The repayment term, depending the bank, can range from 20 to 35 years for a maximum age of 65 years for the applicant. In terms of interest rate, banks usually offer from 8% to 8.5% annual interest rate (9% for non-residents). Rates can be negotiated depending on the relationship established with the bank granting the credit, on credit history and competition offers.
9- Costs associated with a mortgage loan: One common oversight is the cost incurred in mortgage loans and purchase of properties. There are indeed several essential costs that must be taken into consideration.
a- Notary fees and transfer tax: they can amount up to 4.5% of the purchase price. These fees include the government tax on the transfer of property that the notary will collect on behalf of the government and will upon closing disburse to the Inspectorate of Taxes of Sint Maarten. If the applicant is purchasing a furnished property the notary may consider deducting from the purchase price up to 10% as value of the furniture before calculating the transfer tax payable. The applicant may consider alleviating the funds to be disbursed from personal savings whether the bank will accept financing in part or in full the notary fees.
b- Mortgage loan fees: this amount corresponds to the stamp tax collected by the bank on behalf of the Central Bank of the Netherlands Antilles equal to 1% of the mortgage loan as well as fees payable to the bank for all services rendered. The total fees can amount up to a total of 2.5% of the mortgage loan.
c- Life insurance: Once the loan has been approved and for all residential loans, the applicant will be requested to apply and obtain a life insurance placing the bank as first beneficiary up to the amount of the mortgage loan. Premiums will depend on applicant’s age and health conditions as well as the amount to be insured.
d- Property insurance: The bank will also request from the applicant’s proper property insurance, including fires and extending perils. Some banks may also consider including the property insurance into the amount loaned.
e- Construction All Risk Insurance: will be requested in the event of a construction loan.