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Are you thinking about relocating to the Bahamas? You’re not alone. Thousands of expats become permanent residents of the Bahamas every year. From breathtakingly beautiful beaches to exclusive private beach cottages, the Bahamas is one of the dreamiest destinations for relocation.
Bahamas real estate is also hot, with properties worth anywhere from $500,000 into the millions. And, the island’s lenient policies for international investment attract thousands of overseas buyers to purchase real estate.
So, non-Bahamians can buy real estate easily with minimal restrictions. But how do you obtain a mortgage in the Bahamas for expats? Are interest rates higher? Would a Bahamian central bank consider loaning you money, or would you have to seek help from other institutions?
Whether you’re looking at resort condos or exclusive private beachfront properties, you should be aware of all the costs involved with getting a mortgage in the Bahamas. The good news? Permanent residents and non-residents alike buy Bahamian property all the time, so you can undoubtedly find a mortgage.
Here at Better Homes and Gardens MCR Bahamas, we help hundreds of foreigners find the perfect home or investment property. Our skilled agents have combined decades of experience, and are well-versed with the Bahamas real estate landscape — from pre-construction resort condos in Grand Bahama to contemporary, modern beach cottages in Eleuthera to the ever-popular Nassau.
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 to 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 search, 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 of a down payment do you need?
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 properties’ 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?
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%.
Average interest rates according to the Central Bank of The Bahamas.
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. The country welcomes foreign investment. We see that through the International Persons Landholding Act, 1993, which allowed foreigners to purchase land or property without a permit from the government. The act makes mortgages in the Bahamas accessible to expats to encourage economic growth and investment in the islands.
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.
Steps to Getting a Mortgage in The Bahamas as an Expat
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. Consult 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.
2. Shop Around
While your mortgage options are more limited in The Bahamas than 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.
3. Get Organized
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.
Conclusion: Get Support 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 all the market’s vast options before they secure a mortgage in The Bahamas for expats.