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First Time Homebuyers



Where do I start?

Top 9 things every first time home buyer needs to know.

1. How much do I need for my deposit?

  • First things first, you need to determine how much money you can have available to put down as a deposit on a property. From this you'll be able to work out how much of a mortgage you will require.
  • The minimum amount required for a deposit is 20% of the lessor of the purchase price or the appraised value of the property. The term loan to value (LTV) ratio is mentioned often. This is the amount of the mortgage expressed as a percentage of the value of the property you're looking to purchase. For example, if you're looking at a $1,000,000 property with a $200,000 deposit, you'll need an $800,000 mortgage which equate to an 80% LTV.
  • 'Typically you will need to have 20% of the purchase price (or the current appraised value) available as a down payment for your home. However, be sure to speak with us and we will be able to assist with determining your down payment requirements based on your personal circumstances.' Come and talk to us to see how we could help.

2. How much could I borrow?

  • The amount you could borrow generally depends on your income. We will take into account your income, financial commitments, such as loans or credit cards, and your on-going expenses, such as land tax, insurance and utility bills when accessing your overall ability. The Bank will only lend an amount that you can comfortably afford to pay on top of all your existing repayment and general living expenses. See how much you can afford.

3. What are your upfront costs?

  • The following one off up-front costs all need to be factored into your budget to be paid before you move in:
  • your deposit
  • Negotiation fee
  • appraisal fee
  • legal fees
  • stamp duty
  • moving costs

4. What will my repayments look like?

Principal and Interest

  • HSBC Bermuda offers only principal and interest repayment for Residential Mortgages. Each monthly payment pays towards the underlying principal, as well as the interest applicable on the loan. This repayment option ensures your mortgage is fully paid off at the end of the mortgage term assuming you meet all the required monthly payments.

5. Which type of mortgage is right for me?

  • If you're unsure which mortgage is right for your you then you would benefit from meeting with one of our experienced Personal Bankers, Wealth Specialist or Premier Relationship Managers who can advise on which mortgage product is suitable for you.
  • Here is a brief explanation of the two mortgage types that HSBC Bermuda offers:
  • Variable Rate Mortgage
    A variable rate mortgage will fluctuate with the HSBC Bermuda Base Rate throughout the mortgage term. While your regular payment will remain constant, your interest rate may change based on market conditions. This impacts the amount of principal you pay off each month. When rates on variable interest rate mortgages decrease, more of your regular payment is applied to your principal. Additionally if rates increase, more of your payment will go toward the interest.  A variable rate mortgage typically offers more flexible terms than a fixed rate mortgage.

  • 5 Year Fixed Rate Mortgage
    One of the most popular types of mortgages is the fixed-rate mortgage. Fixed rate refers to the fact that the interest rate remains the same over the term of the mortgage. This is in contrast to a variable rate mortgage in which the interest rate may change. If you have a set budget and want to have a predictable payment from month to month, a fixed rate mortgage might work well for you.

6. When do I apply for a mortgage?

  • Once you have met with a Personal Banker, Wealth Specialist or Premier Relationship Manager to receive pre-approval for your mortgage, it is best to continue with the application process by fulfilling all of the conditions (i.e verification of income, assets, etc.). This is necessary to ensure that once you have found your dream home, the final approval process should be seamless.
  • The pre-approval letter is not a binding offer to lend but it will give you an indication of what you may be eligible to borrow the, subject to a full affordability assessment and approval of the property.
  • A pre-approval letter is a convenient thing to have when you begin looking for houses. It shows the agents and sellers that you are a serious buyer with a mortgage lined up and thereby puts you a step ahead of other potential buyers.

7. How do I find my dream home?

  • Once you've got your pre-approval letter begin your property hunt by registering with reputable local real estate agents, visiting property-finding websites and creating email alerts to notify you when properties that fit your criteria come on the market.
  • See as many properties as you can to get an idea of what you like, what size you can afford and how the process compares. Go to viewings with a list of key questions for the real estate agent or seller. If you're viewing a lot of properties it can be hard to remember all of the details later so compile a checklist of your requirements, jot down notes and take pictures as you go along.
  • It's a good idea to request a second viewing on properties you're interested in, ideally at a different time of day. This gives you a chance to see if your first impressions were accurate to ask additional questions and to get a feel for external factors such as what the neighbours are like, how easy it is to park and how much natural daylight the property gets.

8. What happens after my offer is accepted?

  • You'll need to instruct a lawyer to handle the legal process of transferring the property from one another. This is known as conveyancing. Legal fees are normally dependent on the purchase price of the property you are buying however they do vary so it pays to shop around. Please note that the Bank does have certain requirements of law firms for conveyancing transactions, and a list of permitted law firms will be provided to you by your Personal Banker, Wealth Specialist or Premier Relationship Manager.
  • Once you've instructed a lawyer, the seller will send a contact with information such as the price of the property, what's included in the sale and the proposed date of completion. Your lawyer will check the contract and all the associated legal documents. They'll conduct planning and title searches to find out about the property's history and contact the local authority to ask about any new developments that might affect it.
  • The process of applying for your mortgage can conveniently begin online. However whether applying online or in a branch you'll receive advice from experienced lenders from our Personal Banker, Wealth Specialist or Premier teams as to which mortgage is suitable for you.
  • To apply for a mortgage you need to provide your lender with the following:
  • Valid ID for each person applying (passport, Bermuda driver's license)
  • Proof of current address (BELCO bill, cable bill)
  • Proof of income earnings for each applicant and proof of employment letter
  • If self-employed/business owner – past 12 months of Payroll Tax Returns or 2 years' worth of financial statements
  • Copy of rental agreement and statements if rental income is not direct deposited to HSBC
  • Latest pay stubs, normally the previous three months
  • Details of the property you are buying
  • Real estate agent's and lawyer's details
  • Your lender will run credit checks to make sure you have maintained a good credit history. They will also arrange for an appraisal to value your property, and to make sure it is worth the agreed price. You usually need to pay an appraisal and arrangement fee to your lender.
  • If the application is agreed, your lender will arrange a meeting for you to sign off on the Offer to Finance Letter. Then this, together with mortgage instructions is forwarded by the Bank to the lawyer handling the transaction. A meeting is then arranged for you to attend the lawyer's to sign off. You'll need to have valid property insurance in place in case something happens to the property before you move in. This is a legal requirement. You may also want to consider taking out mortgage protection insurance or life insurance to ensure any outstanding amount on the home loan would be paid off in the event of your death.

9. What kind of appraisal do I need?

  • Your lender will arrange a standard appraisal to assess the current market value and make sure the property is an adequate security for the mortgage. This is an appraisal carried out on behalf of the Bank for credit purposes, and a physical visit to the property is required.

 

Your property may be repossessed if you do not keep up repayments on your mortgage.

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