The Key to Home Ownership

For many Jamaicans, a marker of personal accomplishment is to own a “little piece of the rock” Jamaica.

Homeownership or land acquisition is a goal that most, if not all, citizens dream of achieving. The process, however, to accomplish this is perceived to be difficult and unnerving. Demystifying the experience is vital in helping persons understand how to get their own key.

Speaking at the recently concluded Wealth Summit staged by the Ministry of Finance and the Public Service, Senior Manager of Sales and Business Support at Victoria Mutual Property Services, Allison Morgan, says although the path to homeownership can be daunting at first, the key is to understand the steps.

“The best investment on Earth is earth. So how do you acquire real estate? Most of my clients will say I started by looking in the classifieds and visiting realtor websites and tell them of my interest in the property, but this is not the first step; you should actually start by speaking with the experts.” Mrs. Morgan explains.

The experts, she says, can be a professional realtor, credit officer or a financial advisor. “You do not start the journey by looking for the house first”.

Mrs. Morgan outlines that there are four basic stages to bear in mind, and being knowledgeable about the process enables the first-time buyer to make wise decisions.

“The four basic stages, pre-qualification, save, search, secure. At the pre-qualification stage you will sit down with the expert from Victoria Mutual or a financial institution, they will look at all your records and they’re going to assess exactly how much you can borrow from them and put you on the path to start saving. They will then tell you how much money you are qualified to receive for mortgage financing.” Mrs. Morgan says.

She says after someone is pre-qualified, they will need to save funds to put towards the purchase of the property. “We refer to these as your opening and your closing costs. Your opening cost is really your deposit, and it ranges from about five to 10 per cent of the sale price. You will want to save this amount for about two to five years. You’ll need to save 10 per cent for the closing cost which covers a plethora of expenses, sale agreement, valuation, stamp duty registration, processing fees, a credit report.” Mrs. Morgan tells JIS News.

It is important to note that if an individual is getting financing through both the National Housing Trust (NHT) and a credit union, this route is known as a pari-passu mortgage agreement.

A pari-passu agreement gives multiple lenders equal claim to the assets used to secure a loan. In simple terms, it means that the NHT would be lending at their rate – as low as one per cent, and the credit union would lend the balance of the purchase price. The pari-passu agreement will cover 90% of the purchase price of the property. These agreements are only offered by credit unions in Jamaica.

In 2019, the Government increased the NHT loan limit from $5.5 million per contributor to $6.5 million, allowing contributors to have greater access to owning a home.

She also explains that NHT contributors can access money to put towards their opening cost.

“CRTD is an acronym that stands for contribution refund towards deposit. This is actually a benefit that you can access via the NHT if you are an active contributor. If you have been contributing in excess of seven years and you’re ready to purchase real estate but do not have all the money towards a deposit, guess what? The NHT has an option for you to access your seven years’ return before they’re due. They will give you this as a collective lump towards your deposit.” Mrs. Morgan notes.

Then comes the third stage in the process that most people begin first – searching. “This is the fun part. You start to search by making sure you speak with your realtor. Why do you need a realtor? ‘The realtor is going to be your guiding light and hands in acquiring real estate. There is absolutely no cost to the purchaser to use a realtor. The realtor doesn’t get paid from you; they get paid from the seller. The realtor will see if, for example, the property needs termite treatment, is prone to flooding as well as other things.” Mrs. Morgan says.

After pre-qualification, saving and searching, the final stage is to now secure the property. A vendor is at an advantage at this stage once they received a pre-qualification letter from the lending institution.

“Sellers, realtors, brokerage houses and other persons really take you seriously when you can show proof of purchase. Pre-qualification literally opens doors for you to go in. So once you’ve passed that stage, you’re going to secure the property by getting a mortgage. The mortgage process can be summarised in four quick steps.” She notes.

The application for a mortgage builds on the pre-qualification stage, followed by the acceptance of the mortgage. The acceptance is made once the lending entity does the underwriting and their due diligence on the property to ensure it is sound.

“Then we go to the registration. This is where the property is being transferred from the previous owner to you and this is executed by the Titles Office/Stamp Office of the National Land Agency… once your name is on the land title, you are now a property owner. Congratulations.” Mrs. Morgan concludes.

The process is not set in stone for each prospective buyer, “There’s a whole slew of things and it’s all dependent on your individual circumstances. There is not a checklist that we can take and give everyone and say, here’s a checklist for you. But we’re here for you to come and speak to us, then we can give you your tailored roadmap to get you to homeownership.” She explains.

Also crucial to the process, Mrs Morgan says, is getting an experienced lawyer who will manage the sale process.