Understand the true cost of homeownership
Bridgetown, Barbados — Homeownership will likely be the single largest financial decision most individuals will make, so when seriously exploring options to build or acquire a home, ensure that both the initial financing costs and future ongoing costs are taken into consideration.
In view of this reality, leading insurance and financial solutions provider, Sagicor, wishes to advise any individual exploring the idea of a mortgage to facilitate homeownership, to make sure they have a full understanding of the various upfront and recurring expenses they are likely to incur.
“Individuals should always start their path to homeownership by being prequalified, so they can determine the price range within which they can house hunt, or the size or type of property they are able to build. Prospective homeowners should also consider all other costs to be better prepared and to budget accordingly.” said Joy Gibbs, Manager – Mortgages at Sagicor Asset Management Inc.
She pointed to the fact that when purchasing a property or land, individuals are usually required to make a deposit, typically around 10% of the purchase price. “For example, if purchasing a plot of land costing $100,000, a deposit of $10,000 would be required. Therefore, we recommend that persons start saving from as early as they can. No amount is too small and Sagicor offers a variety of savings options which persons can use to build their savings, either through a life insurance policy, mutual fund, registered retirement savings plan or other investment option”, said Gibbs.
She made the point that borrowers will incur some upfront, one-time expenses including legal fees, property valuations, quantity surveyor reports and application fees. Once the mortgage is approved and the purchase or construction is complete, property owners must then turn their attention to immediate costs such as purchasing furniture and appliances, if not previously owned. Some other important investments one should consider are security costs; fencing, guard wall or home monitoring system; water tank, water heater or solar panels, all of which can be included in the mortgage.
“Again, these are the upfront, one-time costs which are generally not incurred again. Persons will however incur recurring expenses in addition to making their monthly mortgage repayments”, she stated. “It is imperative that persons take into account ongoing expenses such as property and contents insurance, which is necessary to protect your home and valuables against damage due to theft, natural disasters and other unforeseen perils; property tax, which is paid to the Government annually and is based on the value of the property; utility and maintenance costs to ensure the running and upkeep of the property.”
Gibbs therefore encouraged interested persons to speak with a Sagicor mortgage officer, who would assess their financial position to ensure persons can continue to live comfortably while paying a mortgage, in addition to managing these other expenses.