The lure to return to the homeland may not be as attractive as it has been for returning nationals, but setting aside the island’s current economic challenges, there has never been a better time to buy.
Many Barbadians living overseas have a long-term plan to retire to their homeland or to own a piece of the Rock and spend more holidays in the sun before making the final move. It is an understandable dream given the beautiful attributes Barbados has to offer and nobody knows them better than a local. Even in far off lands the lure to return at Christmas or Crop Over is an integral part of an exile’s calling and in the past decade the numbers coming home at peak holiday times have significantly increased.
There’s no place like home and for many Bajans that means their own place in the sun. And it has never been better because global recession has driven property prices down and stopped the spiralling increases that were taking real estate prices outside the reach of most mortals. If the economic meltdown has had any positive spinoff then it has to be the end of rampant house price increases and a return to realistic and affordable prices. And that includes construction costs as the cost to build has dropped despite the increase in some materials over the last few years. This is because less construction has meant less work and artisans returning to more competitive labour costs than those raging pre-2008. But the million dollar question of whether to build or to buy involves a lot more considerations than cost, and persons trying to manage a building project from an overseas domicile are still taking a massive risk. However, with property prices dropping in recent times the economics of buying versus building makes it debateable whether there is any potential gain unless the land has been gifted.
Overseas Barbadians are still eligible for local mortgages and therein lies the door of opportunity to get a foothold on the property ladder and continue to work and live overseas. Many locals have already taken advantage of lower prices and available mortgage facilities to buy in the past few years and are making more visits home for holidays. And they are bringing plenty of friends as it is amazing how popular people become when they own a place in the sun!
Lenders have different terms and conditions for Barbados nationals living overseas, but it is possible to borrow up to 100% in some circumstances with at least one lender. Living and earning overseas has another major advantage in that the borrower has the option to borrow in either Barbados dollars or in a foreign currency. For example, the Loan-to-Value (LTV) with a US dollar loan may be restricted to 65% and the repayment term may be limited to 15 years, but the interest rate could be as low as 4% compared to 6% to borrow in Barbados dollars where the LTV is much higher and the repayment term much longer. Inadvertently taking out a loan over a shorter period will save the borrower thousands of dollars, albeit they have to have the income to pay the higher repayments over the shorter period.
And if all this math proves too complicated then go to an experienced Mortgage Broker and let him or her work out all the numbers and give you the right advice to fulfil your dreams.
Times may be tough at present, but opportunities still exist to make prudent financial decisions that will look very smart when the tide turns, as it will some time in the future.
Clarence Hiles is a Caribbean Mortgage Broker and Editor of Caribbean Property Magazine. He can be contacted at clarence@caribbeanmortgages.com