Getting a mortgage in the Cayman Islands

Buying a property is one of the biggest financial commitments of our lifetimes and the majority of us will need to borrow a certain amount in order to complete the transaction. Several retail banks in the Cayman Islands offer financing for property purchases.

Mortgage conditions in the Cayman Islands vary from bank to bank, but for a primary residence most will require a deposit of between 10% and 35%, and amortisation terms are between 10 and 30 years. Banks will not usually allow the mortgage term to run beyond retirement age.

Below we answer some of the most common questions about getting a mortgage to purchase a property in the Cayman Islands.

What types of mortgages are available in the Cayman Islands?

Fixed rate and variable rate mortgages are the most common type of mortgage offered in Cayman. Interest rates are usually set at between 0.5% and 3% above the US and Cayman Prime rate. It’s advisable to shop around and see what rates different banks are offering.

Interest-only mortgages and no-deposit mortgages do not exist in Cayman.

How much can I borrow?

This is the big question. How much you can borrow will determine what property you can afford.

That’s why it’s best to talk to banks before you even start looking at properties, so that you have a clear idea of the top price you can pay.  Otherwise you risk falling in love with a property that is simply outside your budget.

Some banks will lend buyers up to 90% of the purchase price, but the loan amount will be determined by various factors. Your income or salary is the main factor, but any existing debts or expenses will also be taken into account, as will your age and the maximum term available to you. As a general rule, banks will assume you can comfortably afford to spend one third of your salary on mortgage repayments. If you are a resident on a work permit, your lender may require you to have been working in the Cayman Islands for a minimum of six months.

Can I get pre-approval for a mortgage?

You can and you should. By talking to banks and applying for Pre-Qualified Financing you’ll know what you can afford and so can avoid wasting time looking at properties that are beyond your budget.

A formal pre-approval shows both your realtor and the vendor that you are serious about buying and it means you can put in an offer with the confidence that you will be able to finance it.

To get pre-approved you’ll need to meet with a mortgage officer to discuss your options, and you’ll need to submit copies of documentation such as proof of salary and verification of employment. It’s advisable to talk with various lenders as all offer different terms and conditions.

Can I get mortgage if I am not a Cayman Islands resident?

Yes, but the terms will be different. Cayman Islands banks will finance property purchases for non-residents, but properties that are not the borrower’s primary residence are considered riskier. Banks may therefore require a greater deposit (around 30%) and may charge higher interest rates. However, the interest on your loan is tax deductible. As a non-resident you can also obtain a mortgage from a lending institution in your country of residence.

Is there stamp duty on mortgages in Cayman?

Yes, stamp duty on registered mortgages is payable at a rate of 1% on loans up to CI$300,000 and 1.5% loans over CI$300,000.

Can stamp duty be financed?

Usually, no. Lenders typically want you to have enough savings to cover the down payment and stamp duty. However, if you already own a property and have sufficient equity or can make a larger down payment, you may be able to finance stamp duty.

Does my mortgage cover chattels?

Chattels are the moveable items such as furniture and appliances that are sold with the property. If the purchase agreement includes an amount for chattels, you will not pay stamp duty on this amount. Banks typically lend on the purchase price or the market value (whichever is lower) so if the purchase price includes chattels, these can be financed.

What documentation and paperwork do I need to get a mortgage?

Again, this will vary from bank to bank, and your lender will inform you of their requirements, but some of the paperwork they will need to see usually includes:

• Employment letter
• Photo ID
• Copy of purchase agreement
• Life insurance policy for all signatories
• Fire and hurricane insurance for property
• Property valuation

Most lenders will also require a commitment fee of 1% of the loan amount. This is one of several costs associated with buying property in the Cayman Islands that should be factored into your budget.

Your realtor will be able to answer many of your questions on property and financing in Cayman, and can direct you to reputable lenders. Contact us for more details.