Getting a Mortgage in The Bahamas: How To Do It & Best Banks [2024] - Luxury Bahamas Real Estate

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President & CEO at Better Homes and Gardens MCR Bahamas

Carey is recognized as one of The Bahamas’ most respected real estate professionals. He holds the record of selling the largest beachfront property of $21 million (vacant land) in the Bahamas and has also been the Top Producer of real estate transactions in Ocean Club Estates. With over 30 years of sales experience, Carey founded MCR in 2008 and now employs an elite team of 25 highly skilled associates.

How to Get a Mortgage in The Bahamas

You’re one step away from short international flights to your new home on Paradise Island, Eleuthera, or anywhere else in The Bahamas. Breathtakingly beautiful beach sights await you once you take these steps to get a mortgage in The Bahamas as an expat.

1. Research Banks in The Bahamas that Lend Mortgages

While your mortgage options are more limited in The Bahamas than in your home country in Canada or the US, they are plentiful enough to warrant some shopping and comparisons.

Call your local bank first, and ask them if they offer mortgages for foreign property. Your next step is to check out The Bahamas branches of international banks and local Bahamas banks.

Compare down payments, interest rates, amortization periods, and anything else you notice that might help you narrow down the right mortgage lender.

2. Prepare Financials

Of course, you’ll need documentation for a Bahamian bank to consider you for a mortgage. Compile all the documents you need early on to avoid any scrambling throughout the mortgage process.

To ensure mortgage approval, you might need to compile employee letters, corporation information, references, and tax documents. Give us the raw materials and let us handle the rest–Better Homes and Gardens MCR Bahamas uses your details and our expert knowledge of the Bahamian market to negotiate the best terms for you in the purchase.

3. Determine Affordability

The first step you need to take before you can buy a house is determining the affordability of your mortgage. Several factors contribute to calculating the affordability of a mortgage.

Here are a few to consider:

Your Income: Because every mortgage is different, there are no specific income requirements for an individual to qualify for a mortgage. Your bank will need to know your total annual income before taxes. If you have a co-borrower, you can combine your income.

Debts: These are recurring monthly or yearly expenses, such as credit cards, student loans, or car payments.

Down Payment: The amount of money you spend to purchase the home. The down payment for a home in The Bahamas is 6% of what the home actually costs.

Debt-to-Income Ratio: The total of your monthly debt payments divided by your gross monthly income. This process will help you pay off your mortgage in a manageable way. Companies like Zillow provide their customers with a DTI Calculator.

Interest Rate: The amount a lender or bank charges the borrower for taking out a loan. The rate is usually presented as an annual percentage of a loan balance. Interest rates vary, depending on credit scores and down payments.

Once you have a good understanding of the investment, you and your bank can work together to find the best mortgage plan to fit your needs.

4. Choose a Mortgage Lender

Once you know the budget, you can find a mortgage lender to help you buy your Bahamian home. The right mortgage lender should do more than secure the lowest rate but also make you feel comfortable and be an expert in loans and mortgages. We suggest talking to a few lenders before deciding on one.

Check out some of the most trusted banks in The Bahamas to get a mortgage!

5. Get Pre-Qualified or Pre-Approved

Prequalification is a basic review of your credit score and income. The pre-approval process is more complex. You’ll likely have to submit several forms in this process. If you’re pre-qualified or pre-approved, you won’t automatically get a mortgage, but it increases your chances.

6. Find a Property in The Bahamas With a Real Estate Professional

It’s hard to believe that there’s such a thing as a bad investment in The Bahamas. But not every property is equal, and overseas buyers should always consult with a real estate firm that has decades of experience buying, selling, and leasing property in The Bahamas. Sounds like our staff at Better Homes and Gardens MCR Bahamas!

We’ll help you look at every Bahamas neighborhood you’re interested in to explore your options and guide you through the entire buying and mortgage process.

Real estate is a significant investment that might feel more complicated when purchasing it out of your comfort zone. But with a great real estate company, you have a team on your side that supports every step.

Check out more of our listings here at Better MCR Bahamas.

7. Make an Offer

Once you’ve chosen your dream house and know your budget, it’s time to make an offer. The Bahamas has a reputation for being one of the best and safest places to live, so don’t go too low on the initial bid.

The real estate market in The Bahamas is extremely competitive. Thankfully, the team at Better MCR Bahamas is here to help you find your dream home without the hassle.

8. Apply for the Mortgage

If your loan is approved, your lender will take you through the next steps. Work out all the paperwork and apply for the proper loan options. This process will move quickly, so the sooner you apply for a mortgage, the sooner you’ll get a home.

9. Underwriting and Approval

Once you’ve applied, the lender will take a final look at your credit and financial background to make sure you’re eligible for a loan. This might take a bit of time, but once you’re approved, you’re clear to close.

10. Closing

At least three days before closing, your private lender or the bank will send you a Closing Disclosure. The document includes the loan terms, projected monthly payments, and final costs. If you have any questions, ask your lender.

11. Post-Closing

Congratulations, the home is yours! Now it’s time to schedule a home inspection, update your address, and keep track of all the important closing documents, papers, and mortgage agreements.

Best Banks for Mortgages in The Bahamas

Before you get a mortgage in The Bahamas, you need to find a trusted bank with the proper jurisdictions to create mortgages. While you can choose a bank or a private lender outside of The Bahamas, Bahamian banks will be able to walk you through the unique process of getting a mortgage.

1. Scotia Bank

Scotiabank Bahamas has an online mortgage center and checklist for private and commercial lenders. The bank provides mortgages for subdivisions, construction, investment, commercial, and residential properties.

Mortgage Services:

Home Builder Loans: For construction, if you want to build or renovate your home.
Pre-qualification: Makes getting a mortgage easier by defining your budget, providing proof that you qualify for a loan, and organizing the necessary documents.

2. Commonwealth Bank

The Bahamas Commonwealth Bank provides competitive mortgage rates for applicants over 18 years old and with at least two years of employment history that meet their credit requirements.

Mortgage Services:

Mortgage Loans: For single-family homes and townhouses.
Home Equity Loans: A one-time payment you can pay at a fixed rate over time. This is in addition to your mortgage.
Real Estate and Commercial Lending: Apartments, stores, and other commercial real estate options.

3. Central Bank of The Bahamas

The Central Bank of The Bahamas does not offer a mortgage service, but if you want to create an account, they offer other services.

Banking Services:

Exchange Control: Government-controlled restrictions on private transactions involving foreign currency.

Financial Statistics: Provide reports on The Bahamas real estate costs, average salaries, and more.

Deposit Insurance: Your money is protected, even if the bank fails.

Currency Exchange and Digital Currency: Exchange USD for BSD or transfer it online.

Bank Supervision: The BSP monitors risk and creates policies or procedures under which banks operate.

Learn More About Getting A Mortgage in The Bahamas

If you still have questions about all that’s involved in getting a mortgage in The Bahamas, the typical mortgage rates, proper jurisdiction, and more, MCR Bahamas is here to answer them.

Is it hard to get a mortgage in The Bahamas?

Is it hard to get a mortgage in The Bahamas? It’s not necessarily hard, but there are some differences between getting a Bahamas mortgage as an expat than if you were to obtain a mortgage in your home country.

Why? Interest rates and down payments are higher. Additionally, some banks offer half the amortization period for foreign property purchases compared to local purchases.

Overall, you have similar costs to local mortgages as you undergo a Bahamian mortgage process. You’ll still have to pay for legal fees, appraisals, title searches, registration, insurance, and more.

But foreigners–whether they’re Bahamas permanent residents or non-residents living in The Bahamas on a work permit–can definitely obtain a mortgage! Your options are as follows:

Local banks, though they may offer more favorable rates to residents; and
Local branches of international banks, like the Royal Bank of Canada, Scotiabank, and FirstCaribbean.

How much is a downpayment on a mortgage in The Bahamas?

In Canada and the USA, the ideal down payment is 20%. Anything less will subject you to monthly mortgage insurance. However, the average down payment on a US mortgage is significantly less, at 6%.

In The Bahamas, you’ll need to secure a large sum of capital for your down payment. Most banks, including international banks like the Royal Bank of Canada, won’t lend you more than two-thirds of the property’s worth. This means you’re going to need at least a 33.3% down payment.

The down payment increases if you’re building your home. In that case, banks will usually only lend you 50% of the purchase price (requiring a 50% down payment from you).

How high are mortgage rates in The Bahamas?

Interest rates fluctuate, especially these days as we’ve seen with the COVID-19 pandemic. Let’s look at some recent averages. According to Forbes and Bankrate.com, the average American interest rate for a property loan with a 30-year amortization is 4.12%. For shorter amortization periods (15 years), the average is 3.38%.

In The Bahamas, recent mortgage credit interest rates were a bit higher than that. In Q3 of 2021, the average Bahamas mortgage rate was 5.21%, while now it’s hovering at just under 5%. It might also be wise to familiarize yourself with the average cost of Bahamas real estate and rental costs when planning your budget. You can also reference RBC Bahamas mortgage rates and compare them with your results.

Higher down payments and higher interest rates don’t sound all that appealing. But consider this: The Bahamas has one of the lowest tax rates in the world. There are no taxes on income, and no capital gains tax, inheritance tax, or company tax.

Of course, if you’re a US citizen, you’ll still need to submit a US tax return each year, although you might qualify for certain exclusions or tax credits.

Can a foreigner get a mortgage for a property in The Bahamas?

Yes, foreigners, whether they’re non-residents or permanent residents living in The Bahamas, can get a mortgage for a property in The Bahamas. Thanks to the International Persons Landholding Act of 1993, which allowed foreigners to purchase land or property without a permit from the government, the country welcomes foreign investment. The act makes mortgages in The Bahamas accessible to expats to encourage economic growth and investment in the islands.

Because of this new act, it’s never been easier for U.S. citizens to get a mortgage in The Bahamas.

Here are a few things you’ll need to get a mortgage in The Bahamas for expats, using RBC’s non-resident USD mortgage requirements as an example:

Bank references of three years
Personal statement of affairs and audited financial statements if a corporation
Approval from the respective central bank and Foreign Investment Board (for some scenarios)
Proof of income (employment letters, tax returns)
Government-issued ID

You’ll also need to provide some collateral and security measures.

Registered First Charge, stamped for mortgage amount in its entirety
Title Search
Property insurance, all-risk coverage
Life insurance, in some cases
Co-signer in some cases

What are the best mortgage options for expats in The Bahamas?

Mortgage options for expats in The Bahamas are pretty straightforward. They can apply for one with a local bank or a Bahamas branch of an international bank like FirstCaribbean (CIBC) or Royal Bank of Canada.

They may also apply for a mortgage in their home country (Canada or US included), as some North American banks provide international mortgages.

To make your mortgage process smoother, you might consider the following:

Saving up for a larger down payment
Pay with cash (ideally for established dwellings, not for pre-construction for houses or resort condos)
Add self-directed IRA funds to your purchase
Consider developer financing if you’re building your house
Get a co-signer

Plus, always consult a lawyer and a real estate professional. At Better Homes and Gardens MCR Bahamas, we’ve helped countless expat buyers not only find their perfect home, but also get through the mortgage process.

Can an American buy a house in The Bahamas?

Yes, many U.S. citizens buy houses in The Bahamas. Because The Bahamas is one of the best places to visit, people fall in love with the easy-going island lifestyle, leading them to invest in residential property.

How hard is it to buy property in The Bahamas?

As long as you have the correct documentation and proof of employment, whether in The Bahamas or in another country, buying residential and commercial property should be relatively easy, especially if you find the right private lender.

Is Buying Property In The Bahamas a Good Investment?

Absolutely. The Bahamas is known for world-class hospitality, stunning communities, and lovely residential and commercial properties. Bahamian properties are one of the best investments you can make.

Pros and Cons of Owning Property In The Bahamas

If you’re on the fence about buying a home in The Bahamas or getting a mortgage, we understand. While no move comes without a downside, there are many more pros than cons to living in The Bahamas.

Pros:

Living in The Bahamas is a dream come true for many. Whether you want to live in an oceanfront home or immerse yourself in the rich culture of the islands, The Bahamas is the perfect place for you.

Access to stunning beaches
World-class education for your children
Beautiful residential properties
Laid-back, relaxed lifestyle
Tax-neutral status

Cons:

Although there aren’t many downsides to living in paradise, there are a few things you might want to consider before moving to The Bahamas.

Can have a higher cost of living
High demand for residential houses

No matter what’s holding you back, buying a home in The Bahamas is more than worth it!

Get Support Getting a Mortgage and Purchasing a Home in The Bahamas

A mortgage is often vital to secure a new real estate investment in The Bahamas, on Paradise Island, Eleuthera, Freeport, and more. But before the mortgage comes the most important decision: the property. How do you pick the right one, and how do you know if it meets your needs when you’re unfamiliar with the neighborhood and market?

Better Homes and Gardens MCR Bahamas is your first stop for quality real estate advice and services in The Bahamas. We value client satisfaction and quality service above all, helping every prospective buyer learn about the market’s vast options before they secure a mortgage in The Bahamas.

Ready to find a mortgage in The Bahamas for expats? Or just want to start looking for a luxury home in The Bahamas?

Getting a Mortgage in The Bahamas: How To Do It & Best Banks [2024]