Innovative funding arrangement
There is a 30% deposit payable within 45 days of reservation. However, the developer can pay the interest on any loan you take out to fund this deposit until completion of your property purchase, with any payments made by the developer being added to the final price.
On completion of the property the developer has arranged a guaranteed mortgage of 70% of the value of your property (the value at Completion). This will almost certainly give you the opportunity to obtain a refund of your original 30% deposit and effectively borrow 100% of the purchase price.
Example:
| Purchase price of a Hotel Studio Suite: | £95,000 |
| Deposit Required (30% of purchase price): | £28,500 |
Property prices in the Caribbean have been increasing in value at a steady 10% to 15% per annum in recent years. Assuming this trend continued at a rate of 10% per annum and you are purchasing at 30% below market value, your property would have risen in value to £220,000 by completion in 2013.
Based on a 70% loan to value mortgage on a £220,000 value at Completion you would be able to borrow:
| Value of the property on Completion | £220,000 |
| 70% mortgage on the value of the property | £154,000 |
Of course, you do not have to borrow the whole £154,000 but this figure is more than sufficient to cover the £95,000 purchase price of the property (plus the circa £12,000 of interest payments if you opt for the 100% finance option) plus any interest payments due on the stage payments.
This results in a refund to you of the £28,500 deposit, which you paid following reservation and an additional sum of money if you drawdown on the full £154,000 available mortgage.
Effectively, you will have borrowed 100% of the purchase price!
A mortgage of £154,000 at a rate of 8% per annum (current rate with First Caribbean Bank) on an interest only basis equates to mortgage payments of £12,320 per annum.
