Articles - Mortgage | Scott Elliott

MORTGAGES

What is a Mortgage?

Legal Charge over property (including home) by a bank who holds property as security for funds advanced. The charge remains in place until the funds are re-paid by the Chargors (borrowers).

Why a Mortgage?

Usually it is the only means of securing funds to complete purchase of property and home or (in some cases) property only or construction of home.

Types of Mortgage:

Purchase land & home
Purchase of property, or
Home construction with or following purchase of property.

The Amount You Can Borrow

Depends on income and commitments, credit history and most importantly the collateral you can offer to secure the funds advanced. Banks will usually lend anywhere between 75%-95% of purchase price for property and home and between 60%-70% on property only and up to 80% of total cost of land and construction costs. These rates vary depending upon whether you are an overseas investor or a local resident.

Security

First legal charge over the property plus life and property insurance assigned to Bank however, if land only, a first legal charge is all that is required as security.

A First legal charge is taken in the form of a charge form with a schedule attached – The charge form contains the following particulars:

the description of property i.e. registration section, block and parcel number
the names of Chargors/Borrowers i.e. names of persons borrowing the money (the names of the chargors must be exactly as registered on the registry. There are exceptions e.g. where the Chargors have a Power of Attorney on behalf of the Proprietors or the Proprietors agree to the Chargors taking a charge over the property)
The Chargee (Bank), Name of Lenders i.e. Bank with address details.
The amount borrowed.
Interest rate.
The charge form must be signed by the Chargors and Chargee and each signature must be witnessed and the certificate of identification must be completed by a Notary Public.
The schedule basically sets out the terms of the mortgage interest rate default.

Interest Rate

Interest rate will vary depending upon your financial standing and relationship with the bank. Typically, rates are between the Cayman Islands prime lending rate to 3% above prime lending rate.

Fees

Stamp duty – 1% of funds advanced up to CI$300,000 or 1.5% above CI$300,000.
Registration fee – CI$50.00
Legal fees vary between 0.5% -1% of the funds advanced.
Other closing costs include stamp duty on transfer (4%, 6% or 7.5% depending on where you buy and whether you are Caymanian), registration fees of CI$50.00, discharge of charge (CI$50.00) and copy of register (CI$20.00).