With a CIBC Caribbean mortgage, you will get:
1. The journey to building your home should begin with a conversation with one of our mortgage specialists to determine your mortgage qualifying limit. Many times clients create elaborate house plans only to be disappointed when they realise their dream home will cost more than they can afford.
To avoid this common mistake, engage your CIBC Caribbean mortgage specialist and use our simple and seamless mortgage health check-up to find out exactly how much you can qualify for.
Knowing how much you can afford can guide you when planning your design and help you to get into your home much faster.
2. Choosing the right land to build on is just as important as choosing the right house. Whether the land you own was gifted, inherited or purchased there are a few important things to consider before building a house on it.
These include:
a. The cost to complete your house. Costs can escalate substantially if your land hides surprises below the surface. Ideally, you should have test holes done on multiple areas of the land to assess how deep you may have to dig before you reach solid rock
b. The risk of flooding or landslides in extreme weather conditions c. Zoning restrictions (e.g., residential vs. agriculture); this can impact how much financing you may be able to obtain\d. The distance to work, public
transportation, schools, recreational facilities, grocery stores and other retailers and close family members
3. It’s recommended that you share your vision with a professional who can output your ideas to working drawings with detailed specifications. Be sure to discuss the features that fit your lifestyle, the size of your lot and your budget. Once completed, these plans are the instructions for the builder; the better they are, the easier the build.
4. Give yourself enough time to get at least three quotations for absolutely everything to be done on the project well before sub-contractors have to be on site. If you rush this part of the project you will not get
the best results.
5. Choose a builder/contractor that comes highly recommended and whose work you have physically seen and inspected. Ensure that you do a thorough investigation into previous construction projects he/she has managed and also speak to past clients.
Your builder/contractor will be responsible for the site and everything that happens on it and can make or break your project.
Therefore, it is crucial that you spend time selecting the right one.
6. Avoid making major design changes when the project has started. Not only will this be costly, but may require planning approval again.
Even small changes in your fixtures and finishes, such as changing from ceramic tiles to porcelain tiles or laying your tiles straight vs diagonally or changing from sash windows to casement windows can eventually cause
your project to run over the agreed budget.
7. Consider lead times on certain products like windows. They can take several weeks to be delivered to your site. If you order them too late it can severely impact your timelines.
8. Do not use funds designated for your project to buy fixtures, fittings, furniture or any other materials outside the initial scope of the individual project stages. This can negatively impact whether there is enough money to ensure your project is completed on time or within budget.
9. Stay in regular contact with your contractor/builder. Keep a record of progress reports, make frequent unplanned visits to your site to see the progress being made and deal with issues as soon as they arise, as it will likely be cheaper for you in the long run.
10. Always keep your mortgage specialist abreast of your progress at every stage. Your CIBC Caribbean mortgage specialist has a wealth of experience and knowledge in managing construction projects and can help you avoid many of the common mistakes clients tend to make.
Unlike a standard mortgage where your mortgage specialist will provide you with one large lump sum when your loan is drawn, a construction or bridging loan is typically drawn in multiple stages over 6-12 months. This construction loan usually attracts a slightly higher interest rate than the standard mortgage until your house is completed and is then converted into a mortgage.
Here is a list of the key documents you will need when applying for a construction loan. Your CIBC Caribbean mortgage specialist will tell you in detail what’s required but here’s an outline:
✔ Proof of identification
✔ Proof of address
✔ Confirmation of assets and debts
✔ Salaried Employees
✔ Self-Employed applicants
✔ National Housing Trust Requirements (Jamaica only)
✔ At the start of the project
✔ During the build
✔ At the end of the project
1. Cost of the land
If you do not already own the land on which you intend to build, you must consider this cost when seeking financing.
2. Construction cost
This will be the bulk of the cost of the project and should include estimates for all of the elements of your building project.
3. Fees and other costs
Some fee costs include stamp duty, legal fees, planning approval fees, and valuation fees. Remember to budget for professional fees associated with design and planning (e.g., architect and engineer). Ask about local authority fees that cover the cost of roads, verges, parks and other amenities attached to the locality (where applicable).
4. Insurance
Mortgage protection cover and building insurance must be in place before the first draw down of funds. Your CIBC Caribbean mortgage specialist can assist you with obtaining these.
5. Timescale and budget
Obtain detailed time estimates up front. Overtime can have a significant impact on the overall cost of the building project or if you need to employ extra people to get a delayed project back on track. In addition, the longer your project takes to be completed, the more bridging interest you will pay. Balance your expectations with your budget.
6. Contingency cost
Because construction projects are seldom completed at the exact amount of the contract sum, you may also qualify for a separate loan for any unforeseen circumstances. This loan is a short term loan of 5 years, only to be drawn if needed. A Contingency Cost or Reserve is required and varies from 5-10% depending on the scope of the project.
For more information please call toll free: 1-866-743-2257
This guide has been published for general information purposes only and is not a substitute for legal and other professional advice. It is strongly advised that legal and professional advice is sought when building. The contents of this document are a reference point and subject to change from time to time.
Typically, you will be required to inject at least 5% of the lower of the cost or value of the home you are looking to purchase. You will also be required to show evidence of your deposit and its source.
If you have not quite raised your deposit and funds to pay the associated costs of your mortgage, we have put together some tips that can help you reach your goal much sooner.
It's never too early to start saving if owning a home is one of your goals. A good savings history helps when applying for a CIBC Caribbean loan, as this demonstrates that you have good financial planning and the ability to make your mortgage payments.
✔ Budgeting - This may not seem like much fun, but it can help provide the peace of mind and structure you need when saving for a deposit. Make sure you're not spending more than you earn and take the time to
work out where your money is going. Use our Budget Planner to get you on your way.
✔ Open a dedicated savings account - Having a separate savings account exclusively for your down payment allows you to keep this money separate and you'll be less likely to tap into it when you're tight on cash.
✔ Set up a recurring transfer - Once you have identified how much you can afford to save and what your savings goal is, use our Online Banking platform to set up a recurring fund transfer so this money is transferred out of your normal account into your dedicated savings account. If it's not easily accessible, you're less likely to spend it.
This might seem obvious but it will be useful to look at your current spending habits and identify where you can potentially make savings. Even little changes can make a big difference in reducing the amount of money you spend. For example, you can consider cutting down on fast food and dining out.
With CIBC Caribbean Online Banking and Mobile App, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Quickly identify areas where you could cut back (e.g. dining out, vacations, online shopping etc.) and instead put that money towards saving for your deposit.
It's a good idea to check rates for your car insurance, health insurance, cable bills, Internet or phone plans. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts. Consider eliminating expenses like cable/ Netflix subscriptions or gym memberships in the short term. Cutting down on these expenses (even just for a time) can increase your cash flow and can help you pay down existing debt faster.
Start with repaying the debt with the highest interest rate. Consolidating your debt can allow you to pay a lower interest rate, repay your higher interest debt sooner and free up funds to put towards saving for your deposit. Speak to a CIBC Caribbean Relationship Manager who will be able to assist you.
If you are in a retirement program, some programs allow persons to withdraw funds up to a certain amount for their first home. Ensure you understand any tax implications or stipulations of your withdrawal before doing so.
If you're fortunate enough to receive an inheritance, why not put it towards your home deposit. Sometimes family members want to assist you in your home purchase by gifting you funds. If you do accept these funds, you will need to get it in writing that the person gifting has no financial interest in the property and do not require you to repay the funds at a later date. This will have to be disclosed to your Relationship Manager.
If you are currently renting, imagine how much you can save if you didn't have this expense. If moving back with your parents or a friend is not an option, consider downsizing your living situation by finding a smaller, more affordable apartment or even consider a roommate. This can sound like a massive inconvenience but in the long term, you can really reap the rewards.
You would be surprised at the amount of money that can be made from second-hand goods. Consider selling items such as clothes, books, DVDs, games and kids toys you no longer need. This can help you earn some extra money and also reduce the amount of junk you carry to your new house.
If you have investments like stocks or bonds, you may consider cashing them out to help with your deposit. You may also consider selling your vehicle to help with your deposit.
Relationship Manager or Mortgage Specialist It can also help to talk about saving strategies with your financial advisor. They are particularly good at identifying everyday cost savings which can help you reach your goal faster.
For more details, call us toll free at 1866 743-2257.
Readers are strongly advised that this document is not a substitute for legal and other professional advice. As such, readers are also strongly advised to seek legal and professional advice when buying or building a home and not rely solely on the contents of this document. The contents listed are subject to change from time to time.
Before you start shopping for a house, you should take a good look at your budget and determine what you can afford to pay each month. As a rule of thumb, we usually recommend that your monthly mortgage payment does not exceed a third of your net salary. If you can comfortably make this payment your experience as a property owner will be more pleasant. Make sure your estimates are based on your current income and not what you anticipate making a few years down the line.
All too often, first-time homebuyers give more thought to interest rates than the mortgage solution itself. While rates are a valid consideration, the different types of mortgages, payment structures, terms and flexibility will have a much greater bearing on the overall cost of home ownership. Beware of financial institutions offering a temporary low interest rate which is only fixed for a year or two. It may be more beneficial in the long run to go with a slightly higher rate which will be applicable for a longer period.
To help determine whether you qualify for a mortgage, your Relationship Manager evaluates your debt-to-income ratio, which is the relationship between how much money you owe and how much money you earn. You need to provide them with the necessary information such as pay slips, credit history, savings and financial account statements as early as possible in the mortgage process in order for this assessment to be done. Make sure you have recent documents ready.
Your CIBC Caribbean Relationship Manager can provide you with a detailed list of all the documents required.
When your Relationship Manager pre-qualifies you for a mortgage he or she provides an estimate of what the bank may lend you. A prequalification is a simple check which can give you an idea of what your price range should be when looking for a house. It's important to note that being prequalified doesn't guarantee you'll get a loan, but it can help the process and guide the discussion with your Real Estate Agent.
In addition to your deposit, buying a house involves closing costs beyond the down payment and these can be significant. These costs can include - legal fees, commitment/negotiation fee and appraisal report fee. Before you draw down funds, the property needs to be independently valued by an approved appraiser on our list. Home and creditor life insurance and stamp duty will be required where applicable. Your CIBC Caribbean Relationship Manager will provide you with a detailed list of costs you can expect to incur.
Note: you will have to provide evidence of your source of financing these costs.
Once the keys are yours, you have additional expenses on top of your monthly mortgage payment to consider, these include property taxes, homeowner's insurance and regular maintenance of your property. Depending on where you live, you may also have to pay fees to a homeowners' association. Your CIBC Caribbean Relationship Manager can provide lending solutions for financing many of these expenses. Ask about our EasyCover Revolving loan and other solutions to help you better manage these costs. In addition, when determining how much you can afford to pay each month for a home, build these expenses into your budget.
Readers are strongly advised that this document is not a substitute for legal and other professional advice. As such, readers are also strongly advised to seek legal and professional advice when building and not rely solely on the contents of this document. The contents listed are subject to change from time to time.
Property Purchase
Purchase price (exclusive of furniture) supported by a sale agreement indicating sale amount, block & parcel number, location and brief description of the property (it is advisable to sign this agreement after financing has been secured)
Valuation/Appraisal report on property being purchased or pledged (this will be requested by CIBC Caribbean at a cost to the client)
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