Non-resident mortgages arrive in Cape Verde

In emerging markets the property developers are much faster out of the starting blocks building their resorts than the banks are creating their non-resident mortgage products. In many cases individuals have to fund their purchases through equity release on their UK property or in cash, thankfully they have low entry level prices on their side. Cape Verde was one such market bereft of local financing options, but this has now changed.

International Mortgage Solutions (IMS) is now able to offer individual clients and brokers three new mortgage products provided by a major Portuguese bank in conjunction with a Cape Verdean bank in which they own a share. The products are flexible, cost-effective and provide clients with euro mortgages for Cape Verdean purchases.

The first is a straightforward repayment mortgage for final payment and transfer of ownership at completion. Up to 85% of valuation or purchase price is available, whichever is the lower, and there is also a five year interest-only option. The term is 35 years and the maximum age a very reasonable 75 for repayment in full. Rates are currently the best available in Cape Verde at 3.3% above annual Euribor, most banks are quoting 4% above. With such a high loan to value (LTV) in conjunction with a rapidly accelerating property market, clients will undoubtedly be able to take cash back already invested in the property during the build period over and above their 15% deposit and costs of completion.

The second is a stage payment ‘bridge’ loan for support during construction. Purchasers can apply to fund 20% of the stage payment profile and absolutely no capital or interest repayments are required for the term of the loan, they are rolled up until the property is complete. As this loan is pre- private purchase contract, it is secured either through a tri-party agreement with the developer such that they guarantee to put the property in the bank’s name if the client fails to complete, or, the client purchases an insurance policy to cover the loan. This product has the added advantage of pre-qualifying clients and therefore giving pre-approval for a mortgage at completion, subject to updated underwriting necessary at that stage. Clients can therefore rest easy in the knowledge that they fit the banks’ requirements for completion financing.

The final product is tailored to clients buying plots and undertaking a self build. The loan can be taken for up to 85% of the end value of the property with the funds being released in stages during the construction period. The first stage will be no more than 15% of the total loan and for the first 24 months payments are interest-only moving to capital and interest after this point. The rate is Euribor plus 3.3%, again very favourable for Cape Verde.

Of course all products are subject to status and providing original documentation. IMS estimates that total costs of purchase and finance will add 10% to the purchase price of a property in Cape Verde.

For more information, visit international-mortgages.org.