Whether you are buying a starter home, an investment property or a vacation home away from home, purchasing a property is likely to be the largest financial investment you will ever make in your life. As such, it is imperative that you arm yourself with as much information as possible to make a well-informed decision.
Below is a guide to understanding the process; this list is not intended to be by any means exhaustive.
1.Know What You Want and Whether You Can Afford To Buy
Make a detailed "wish list" of what you want in a home. This will include location and type of home. Finally, examine your current financial situation and project how much you can afford.
It is highly recommended that you get pre-qualified for a loan before you start your search for a home. This process involves meeting with your lender and providing them with information on your current financial situation and credit history. The lender will examine this information and provide you with details on how much you can borrow. Getting pre-approved will give you an accurate idea of how much you can afford and it will allow you to be taken more seriously in making an offer.
3.Contact A Realtor.
Our highly experienced professionals will guide you through the property search, financing, negotiation and transaction processes.
4.Search for and find a home.
Searching for a home is all about knowing what’s important to you. We recommend you begin your search online where you can view a large number of properties and make a short list for viewing in person with your real estate agent. At Altman, we have an extensive database of properties which can be viewed at altmanbarbados.com. In viewing a home, your Altman agent will help you notice details that you might overlook, provide expert analysis, and can also act as an unbiased advisor.
5.Make an offer and purchase the Home.
Once you’ve found the home you’d like to buy, it’s time to make an offer. If the offer is accepted, you will require a registered Barbadian attorney to search the register and establish the title of the property. The contract will be prepared by the vendor’s attorney, which provides for a deposit to be made securing the property.
6.Secure your financing and close the deal.
It is now time to return to the lender in step 2 to finalize your mortgage details and close the deal. This means finalizing all financial conditions associated with the closing, such as interest rate and down payment. A 10% deposit will be held by the vendor’s attorney in escrow until completion, when the balance of the purchase price is paid and the title passes to the purchaser by way of the conveyance, which usually takes about two to three months. The remaining 90% of the balance due will be paid at the time of conveyance. The final step is for the vendor to pay the transfer taxes and the government stamp duty.
For overseas buyers, foreign currency brought into Barbados must be registered with the Central Bank of Barbados. Non-residents must also obtain permission from the Central Bank if they want to buy property- this is just a logistical requirement as there are no restrictions on foreign ownership of property in Barbados. There is also no Capital Gains Tax in Barbados so investors are not charged for the appreciation in the value of their property.
US Dollar mortgages are readily available to non-nationals and non-residents, from the offshore sector of the local banking industry. Institutions that offer US dollar mortgages are The Royal Bank of Canada, Scotia Bank, and CIBC First Caribbean International Bank. Here are a few guidelines:
-LTV (loan to value) ratio ranges between 60 and 70%
-LTV 50% in excess of US$2.5M
-Minimum loan value of approx. US$250,000.
-Amortization terms range from 5 to 25 years
-Interest rates are pegged against international LIBOR rate.
-Bank’s attorney fees are approx. 1%-2% plus 17.5% VAT.
If the purchaser is buying land, the vendor will require a certificate of compliance from the Town and Country Planning Department Office (TCDPO), which certifies that the roads and services have been provided in accordance with planning guidelines.
If the purchaser is buying a built property that is to be improved, or intends to build a property on the land, planning permission is required from the TCPDO.
In all cases, application is made to the TCPDO and permission is usually granted within a period of two to six months.
Unimproved land is taxed at 0.6% of the site value.
Residential Land Tax is taxed on the improved value at the following rates:
0% on the first US$95,000
0.1% on the excess greater than US$95,000 but not exceeding US$250,000
0.45% on the excess greater than US625,000.
The improved value for all other properties is taxed at 0.5%
A tax cap of US$30,000 has been placed on residential properties.
Pensioners occupying their own residences shall pay land tax calculated and payable on only 40% of the tax demanded.
Land used exclusively for agricultural purposes may be granted a rebate of 50% of the land tax paid; some conditions apply.
Insurance is another main operating cost and ranges from 0.4% for residences, between 0.6% and 0.8% for commercial buildings and 0.9% for hotels. In all cases, the costs would depend on characteristics of the building and the site. Other major costs would include metered utilities and any common assessments applicable to master planned communities.
As an affiliate of CGM Gallagher, one of the largest and oldest insurance brokers in the Eastern Caribbean, Altman Real Estate is able to offer our clients the most competitive rates for property, content, vehicle and other related insurance. To find out more about this service Contact Us today.