A new government-guaranteed home assisted mortgage programme – called GGHAM – was launched recently.
Leader of Government Business Kurt Tibbetts spoke about GGHAM last week during the Cabinet press briefing.
‘This programme offers a new way to home ownership for Caymanians with the financial means to qualify for a mortgage from a private bank, but who lack the required capital injection or deposit to achieve home ownership.’
Under the scheme, applicants can qualify for up to 100 per cent of a loan amount, including closing costs, up to CI$200,000. The government guarantees a maximum 35 per cent of the loan amount.
Seven banks have agreed to participate in the programme: Butterfield Bank; Cayman National Bank; Fidelity Bank; FirstCaribbean International Bank; HSBC Financial Services; Royal Bank of Canada; and Scotiabank and Trust.
‘We are pleased that our negotiations with the banks resulted in achieving a Prime-plus-one-percent rate over the whole term of the mortgage,’ Mr. Tibbetts said. ‘Since the [National Housing and Development Trust] is doing all the prequalification for these loans, they are helping the banks to do the thing they do best – securing the financing and giving final acceptance of the loans.’
Mr. Tibbetts said the banks have each pledged $5 million for the programme over five years.
‘This will be reviewed annually,’ he added.
The programme is only open to people in households where the annual income does not exceed CI$75,000.
Mr. Tibbetts said that earnings ceiling for eligibility would be examined carefully going into the future.
‘Considering the [real estate] market conditions of today… perhaps we’ll have to look at raising that ceiling,’ he said.
The programme is not limited to single-family detached homes. People who already own land can also qualify for a mortgage to build a home under the scheme, but there are limits to the total cost of the project because it still must fall in the NHDT’s definition of low income.
The successful applicant must repay the portion of the loan guaranteed by the government before getting a release. During the period that the guarantee is being held, the loan cannot be refinanced and there can be no further charges placed on the property without the prior authorisation of the government.
Besides repaying the loan with monthly mortgage payments, borrowers must also pay homeowners insurance and life insurance payments.