Thinking of homeownership? Get prequalified before exploring your options
Bridgetown, Barbados — Homeownership will likely be the single largest financial decision you will ever make in your lifetime, so be sure to know all the facts and necessary details when exploring the idea of a mortgage to purchase land, a home or to build.
This is the advice from Sagicor, which offers mortgage financing to buy land, acquire a property, build your home or switch an existing mortgage.
Joy Gibbs, Manager – Mortgages at Sagicor Asset Management Inc, said that now is the right time to buy, build or switch an existing mortgage as interest rates are at record lows. However, individuals should seek out as much information as they can about the process, particularly how much financing they would be eligible for.
“The first bit of advice and most important is to have a prequalification review”, she stated. “That is, know how much you qualify for before drawing house plans or meeting with realtors and starting your house hunt. Your qualification is based on your income and existing debts. So, the more loans, credit cards or hire purchase agreements you have, the less you will qualify for.”
Gibbs used two scenarios to illustrate her point. “On one hand, we have a 30-year-old earning a salary of $5,000 and servicing one credit card with a $3,000 limit who can qualify for a mortgage of $425,000; while in the second scenario, we have another 30-year-old earning a salary of $5,000, servicing one credit card with a $3,000 limit, a personal loan with a $200 monthly repayment and a hire purchase monthly payment of $75 monthly, who would only qualify for a mortgage of $364,000.”
“In both scenarios, the applicants earn the same income, but one qualifies for $61,000 more because they have less debt”, said the Mortgages Manager. “So, when seriously considering home ownership, one should avoid new debt and reduce existing debt.”
Gibbs indicated that the company’s team of mortgage officers also works with individuals to improve their chance of qualifications for financing and ultimately achieving the dream of owning their own home.
Joy Gibbs, Manager – Mortgages, with Sagicor Asset Management Inc.