When buying a home it’s not only about getting a good deal on the house, it’s also about getting the right mortgage deal! This can be overwhelming if you have not done your research right. Banks have criteria’s they are looking at when giving you the mortgage and if you know how they think you can get a good deal!
Below you have tips on how to get a better mortgage deal:
- Decide on a bigger down payment: Generally speaking, you’ll need a minimum down payment of 20% of the purchase price in order to get the better mortgage rates. Mortgages are price adjusted based on risk factors, a loan with 5% down payment is considered higher risk (as the bank owns more of the property) than one with 20% down, and will therefore get a higher interest rate. Also building a house is considered as high risk.
- Consider a loan period: The longer your repayment term, the longer you will pay interest and therefore the more expensive your mortgage will be in the end. So think this through, as you need to look for a situation that would minimizes your interest payments while ensuring that your monthly payments are not too high.
- Your debt-to-income ratio: The bank will look at what other loans and debts you have to determine what you can afford based on your salary. This determines your ability to manage monthly payment and repay debts. This can effect if you get a loan or not as the bank might consider your already monthly payments too high!
- Employment and income stability: Stability of income is one of the important items that an underwriter will consider when you apply for a loan. Banks on Curacao wants you to have a stable job and income, that means “indefinite” contract with your employer. What kind of work-position you have also plays part as this can affect the stability and salary.
- Pay back debts: Banks also look at how you are paying back your debts such as credit cards etc. Having debts is therefore not bad when you are paying it off regularly! So a good payment history will also help you get a better deal on your mortgage.
- Insurances: What many people don’t think about is the smaller costs that will add up by the end of the year. Some banks require for example double insurances which will make the costs higher.
- Hidden fees: Every bank is different but you need to consider what penalty fees could be involved, you can always negotiate interest free payments, no underwriting fee or that you are allowed to pay off the mortgage ahead of the set period. This can save you money in the end!
- Close contact: What not many people know is that the interest rate might change over time and the banks are only obliged to inform the customer when it goes up. So make sure to be in contact with your bank on a regular base for updates on the interest rate as if it goes down you can apply for this new rate!
- Shop around: Contact various banks and lenders and compare the rates and terms they provide you. At the same time apply for a pre approval as this would make it easier when applying for the final mortgage.
- Confide in a mortgage broker: If you feel that all this is too much to handle or you are just not sure how, then we strongly recommend you to confide in a mortgage broker such as Kosta Bon. They will help you with the applications and guide you thought the process against a smaller fee.
In the end, a home loan is not just about getting the best deal -- it's about getting the right mortgage with no surprises so you can be a worry free homeowner,
When you finally make a decision you need property insurance for your mortgage. Decide on one with a complete cover like our Smart Economy Kas where both you and your property are taken care of!