THINGS TO CONSIDER FOR A FIRST-TIME HOME BUYER IN THE CAYMAN ISLANDS

Buying Cayman Property is probably one of the biggest and most important purchases you will ever make. It is also an important part of your life-long financial plan to invest in Cayman. So if you’re thinking about becoming a homeowner, there are a few things you need to consider before you start looking for real estate for sale in the Cayman Islands.

Your creditworthiness
Good credit doesn’t require a spotless payment history, but poor credit can unfortunately be difficult to escape. When you apply for a loan, or any type of credit, the lender must decide if you are a good credit risk for their institution. Most lenders use a scoring system where applicants receive points for factors such as type of occupation, length of employment, and annual income. Applicants may also receive points for the number of previous or current creditors who have rated their credit payment history highly. If you are deep in debt and are applying for more credit, a creditor may consider you to be over-extended and deny your application, believing you may not be able to handle additional payments based on your income and existing obligations.

Determine How Much You Can Afford when buying
To determine what you can pay for your first Cayman Property, it would be helpful to use a home affordability calculator to give you a range of what you could qualify for. You will then need to approach a lender to get pre-qualified and get a more accurate loan limit. This will also give you an estimate of what the monthly mortgage payment will be. Some lenders will advise not to borrow as much as you qualify for because it’s wiser not to stretch your financial boundaries. Another lender may say you should stretch to buy as much home as you can afford, because with regular salary increases, the big payment today will seem like less of a payment tomorrow. Ultimately it is your decision only you can make. 

How long do you plan to live in your new home?
If you buy Cayman property and decide to move after only a short time, you may end up paying money in order to sell your Cayman Islands investment.  The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home. The great news for first time Caymanian buyers is that you pay zero Stamp Duty if the dwelling is to be owner occupied and the market value is below a CI$300,000. For undeveloped land, first time Caymanian buyers pay no stamp duty on purchases valued up to CI$100,000 provided an owner occupied dwelling will be built.
Here are more cost breakdowns for first time Caymanian buyers:

• For houses, apartments or other dwellings valued above CI$300,000 but not exceeding CI$400,000 the first time Caymanian owner occupier pays Stamp Duty at a rate of 2%.
• For first time Caymanian buyers buying bare land valued above CI$100,000 but not exceeding CI$150,000 the stamp duty is calculated at 2%.
• Be advised that there are some zoning exceptions, please check with your CIREBA agent.  

How long will the home will meet your needs
What features do you want in a home to satisfy your lifestyle? And what about the future?  You will  need to make sure that the home has the amenities that you need. For example, a two-bedroom home may be perfect for a young couple with no children. But if you start a family you could quickly outgrow the space. Will you have money to do renovations,  landscaping or add a deck or pool? Having an idea of what you’ll need will help you find a Cayman Islands investment that will satisfy your needs for several years.

Where the money for the house purchase come from?
Most homebuyers will need some money for a down payment and closing costs. With today’s range of loan options, having a lot of money saved for a down payment is not always necessary.  It’s a good idea to shop around to local lenders to determine what their down payments are as well as their interest rate (fixed or flexible). Your lender will should have various options for you to consider.

The ongoing costs of home ownership
Maintenance, landscaping, improvements, and home insurance are all costs that are added to a monthly house payment. If you buy a condominium, you’ll have a strata fee. If you buy in certain Cayman Islands luxury real estate neighborhoods, a monthly homeowners’ association fee might be required.

Make sure to do your research!  Your lender and your Cayman Islands real estate agent should be great resources to give you the information you need to make the best decisions.