TEN WAYS TO HELP NEW AND EXISTING BORROWERS
We live in an era where property prices have levelled off and confidence in property investment has been rocked by financial irregularities across the globe. It doesn’t matter too much if your home is your sole property investment as you aren’t going anywhere so whether it is worth more or less this time next year or five years down the line, it is still your home and you will still be living in it. Maybe not so for someone looking to move up the ladder, but if your home doesn’t get the price you want then there’s every chance the property you are looking to buy will be in the same boat. Life goes on, but for buyers looking to make their first purchase the cost of getting on the property ladder is not decreasing. And for people with high mortgage repayments there needs to be more understanding in tough economic times. The last thing Barbados needs is a Foreclosure industry akin to the States!
That’s why everyone in the business needs to step back and look outside the box because we all need to help local people own a “piece of the rock” and we need to help borrowers though tough times.
Let’s look at ten ways this can be done;
1 First-time Buyer mortgage product-lenders should give the first time buyer a special package and capture their business. Perhaps a low interest rate for the first year, no fees and a high loan-to-value that includes all costs?
2 Low legal fees-What about attorneys giving a 50% discount on professional fees for the first-time buyer and the government wavering the Stamp Duty?
3 Interest-Only mortgage-allow this concession for the first year to all new borrowers 12 months to get back on their feet after the initial outlays.
4 100% loans-lenders don’t like them and those lenders that provide them have hidden costs. Why not offer the full package as cheap as possible to get new borrowers on the property ladder? Perhaps Central Bank could provide a Guarantee Scheme to assist and remove the need for punitive mortgage indemnity insurance.
5 Free valuation/appraisals-What about the vendor, the developer or the lender picking up the tab for this cost and not the borrower?
6 Equity Release-Some lenders allow it but most do not. If a borrower has been a good payer and needs a lump sum surely it is good business to provide the funding without the heavy costs associated with up-stamping the mortgage? Surely the original mortgage document could cater for further advances?
7 Switch Mortgages-All lenders should provide a switch product that will attract borrowers trapped with another lender at a higher interest rate. The product should cover the legal costs and any associated charges. This would allow the potential new customer to switch at no cost!
8 Reverse Mortgages-Allow the senior citizens with plenty of equity in their property the opportunity of drawing an income from it during their lifetime. There has been plenty of talk on this topic, but it needs action and commitment to make it happen.
9 Fixed rates-Most lenders offer 2-3 year fixed rate repayment terms, but with interest rates currently low many borrowers would welcome longer terms and a comfort zone for the future. What about 10 and 20 year Fixed Rates?
10 Restructuring-Lenders should welcome the opportunity of lending to someone who has a number of punitive short-term loans and consolidate them within a mortgage fully secured with property and at a lower lending rate.Food for thought?
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