Home' Trinidad and Tobago Guardian : April 6th 2014 Contents average consumer loan and has a longer life, extending to
between 25 and 30 years, in most cases. The house stands as
its own collateral. Which means that if the mortgagee defaults,
the lending institution can take it away. But then it also will
have the responsibility of trying to recoup the loss, which may
be difficult depending on market conditions.
TBLS's Leslie Nelson:
Leslie Nelson, chief executive officer at the Trinidad Building
and Loan Society, recalls the economic turbulence of the 1980s.
"People were essentially taking their keys back to their
mortgage companies and going to Piarco and jumping on a
plane and going."
Learning lessons from the period, lending institutions want
potential homeowners to be invested in their property. This
usually means a downpayment on the cost of the home of
at least 10 per cent. The home John and Mary want is priced
at $1.6 million. Ten per cent of that is $160,000. They don t
have anywhere near this amount and don t see themselves
accumulating it anytime soon. They have been trying to save
it, but Mary says the expense of day-to-day living keep getting
in the way.
Lashley says the problem here is not so much that John and
Mary do not qualify for mortgage financing. The TTMF head
says it is more a matter of them not being able to find properties
they want and that they can afford. She says the situation is
intensified by private sector developers who have not seen the
middle as an attractive segment for which to build houses, a
point on which the the HDC managing director agrees.
Taking a guess as to why the private sector has largely
ignored the middle, John says, "when you are in the private
sector, you don t consider the social good. You are in business
to maximise profits. The HDC s mandate is to build social
housing, where we will give you a discount.The private sector
will not do that."
Mary thinks this is a fine and deceptive line to draw across
the issue in laying the majority of the blame on developers.
"I think there are challenges on that side as well. The mort-
gage people can t all just sit back and say it is all about the
property. They make it difficult as well."
All of the financial institutions the SBG spoke to have similar
credit requirements for obtaining a mortgage (see table). But
Mary thinks the real problem starts because none of these
lending institutions are actually competing with each other
for the public s business.
Comparing T&T to the US, she says, "Banks actually fight
using incentives to get people to take mortgages with them.
Really and truly, a mortgage is a product that the bank is
selling. It is not a favour they are doing. You have a choice
as you do with milk in the grocery. Here, all the mortgage
requirements are the same. There is not one person who is
competing. Everybody requires a downpayment of ten per
cent. Everybody wants you to bring in a job letter. Everybody
requires you to take a mortgage for 30 years. There s nobody
trying to compete, so you really have no choice."
She also believes that the lending institutions do not make
their loans as accessible as their advertising suggests.
"We went to the bank the other day (bank identified). They
had some kind of seminar thing. They offered nothing, it was
a kind of meet and greet, a mortgage expo kind of thing and
they basically telling you about all the things you already know
you need to have. There are no incentives, no help. There was
a lawyer there, they had a mortgage specialist there, but they
are telling you the same things written in the brochure. So
there is very little help and navigating the mortgage world is
difficult if you have never been in it before.
"They should have somebody walk you through the process.
It shouldn t be a sit-down conversation on one day. I should
be able to call somebody on a phone, someone you don t have
to access through a PBX. I find alot of the processes at the
financial institutions extremely burdensome. You are calling
and you can t get through. And the banks always make it seem
that they are happy to have your business. Come in and get
a loan. It is as easy as 1, 2,3 . But it is not."
But, according to the banks, comparing the US to the T&T
market is a case of comparing apples to oranges. Because of
the relatively homogenous nature of the local market, there
is little deviation in what financial insitutions need to ask for.
Also, they say they are legally required by the Central Bank
to ask for proof of income and address. This is why they ask
for job letters for example.
Clearance from WASA often has the potential homeowner
scratching their head. This is required to ensure that there are
no encumberances on the property. One mortgage officer illus-
trated, "imagine you want to buy a property from someone,
only to realise that they owe WASA thousands of dollars. It
would make you think twice, wouldn t it."
Mitchell is yet to get to the stage where he has found a
property he likes and an institution to assist, but already he s
frustrated. He and his wife do not have the advantage of a
steady credit and employment history, like John and Mary. So
they have chiefly relied on the HDC.
"It s just one big hassle after the other. They keep sending
letters asking you to update your information, current job,
salary, but nothing on when we ll be getting the house. Even
people with houses have problems. Some friends of ours
recently got keys to a place. They haven t moved in yet because
of the condition of the house," said Mitchell.
APRIL 2014 • WEEK ONE www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG5
RULES AND OPTIONS
Many financial institutions offfer special pro-
grammes to customers/members that may
make it easier to purchase a home
Leslie Nelson, CEO of the Trinidad and Tobago
Building and Loan Association (TBLA), notes
that stamp duties, legal fees and the valuator's
report could represent as much as 10-25 per cent
of the cost of purchasing a house.
He says as most people are not prepared for
these costs, the TBLA created its Downpayment
Savings Programmes (DSP)
Under the DSP, association members accumu-
late the necessary funds in an interest bearing
account at competitive rates.
Most credit unions surveyed also had special
loan packages for first time homeowners, where
members were allowed to borrow money for
Eastern Credit Union, one of the country's
largest unions, has the "Homeward Bound Loan."
Here, members planning to buy a home in within
a particular period of time can access up to
$150,000 dollars toward their downpayment.
Explore other housing options
From Page 4
Continued on Page 6
The banks always make it seem
that they are happy to have your
business. 'Come in and get a loan. It
is as easy as 1, 2,3'. But it is not.
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