Nearly twenty-five million dollars in new applications in first six months!

We are pleased to share that we have received nearly twenty-five million dollars of mortgage applications in our first six months. This is phenomenal given the short length of time we have been around.

This loudly and clearly says that service excellence, responsiveness and efficiency will always trump a huge advertising budget, slow response and a status quo approach to business. Kaizen (Japanese for “continuous incremental improvement”) will be a key driver for XM Loans Ltd. Please always feel free to give us your feedback to assist us in making our services as user friendly and practical as necessary.

What is going on with interest rates?

Have you seen the high mortgage interest rates being offered lately? In some instances, lenders are quoting rates that have not been seen since the late 1970’s and early 1980’s. For new borrowers, this means that the cost of the money has gone up in price (in one institution by almost 38%) year over year.

A year ago, mortgage rates were generally quoted around the 7.5% to 8.25% range. Today, you will find mortgage rates pegged around 8% to 11.25% depending on the lender. While the general explanation offered is “tightened liquidity” the upward pressure on interest rates has been building for a while. Combined with the expiration of the stamp duty exemption, these events are moving the goal of home ownership outside the realm of possibility for the average Bahamian.

This notwithstanding, the saying “what goes up must come down” remains true; If you find yourself able to qualify for a mortgage under these onerous circumstances plan to refinance your mortgage as soon as the rates come down. Persons often complain that they do not want to refinance their mortgage or move it from one lender to the next because of the associated costs. What they fail to realize is that the cost associated with refinancing or transferring ones mortgage can be added to the new mortgage and is generally recouped within the first 24 to 48 month.

For example, moving a $200,000.00 mortgage will cost $9,000.00 in fees (mortgage stamp duty $2,000.00 + legal fees $5,000.00 + bank fees $2,000.00). If the interest rate on the existing mortgage is 9.5% and the rate on the new mortgage will be 7.5%, the cost to move the mortgage is recouped by the end of the third year. Thereafter, each mortgage payment yields a net savings of $238.28 per month. Over the life of the new mortgage, you will have a total savings of $77,202.72 (this figure is net of the $9,000.00 in recouped fees). We think that you will agree, that serious consideration ought to be given to refinancing or transferring your mortgage if much better interest rates become available.

From the President’s desk….

Troy Sampson
Troy Sampson, President & CEO

Barrack or the Easter Bunny?

I have watched the US presidential primaries and have found some interesting parallels to local politics. The question is often asked, is America is ready for a black president? Well in our case I ask, is the Bahamas ready for a white Prime Minister?

Most of the arguments that are used in support of Barrack’s candidacy can be used to support Brent’s. Why not? Didn’t luminaries like Martin L. King agitate for all people to be judged on the content of the character and not the color of their skin?

Whether Barrack wins or not and whether we in the Bahamas ever have a white Prime Minister is left to be seen. My only hope is that we base our decision on who is best qualified to lead, and not whose color least offends us!

Your monthly mortgage tip:

Secrets Lenders don't want YOU to know!

Having your mortgage payment split into 24 annual payments instead of 12 can help you to repay your mortgage faster and reduce the interest repaid.

How this works is that the more frequently you reduce your principal balance, the less interest is generated over a given period. So if you are paying on your mortgage twice per month (splitting your monthly payment in half and paying them two times during the month) you will have a more rapid reduction in your loan balance.

The downside of this proposition is that it takes a shorter time for your loan to become delinquent. Usually, lenders will adjust your grace period from 5 days (before the assess a late fee) to perhaps 2 or 3 days. So if you are late paying both payments in a given month, you can have double the late fees assessed to your loan account.

In the end however, we still feel that this is a good way to save money and pay your mortgage off early!

To find out more about what is required for a mortgage, visit our website at www.xmloans.com.

KNOW THE FACTS – THERE ARE SEVERAL PAYMENT SCHEDULES YOU CAN SELECT FROM!

Correction - In last month's edition, we erroneously stated that the stamp duty on a conveyance was calculated on the loan amount. This should have read that the stamp duty is calculated based on sales price. A special thanks to our reader for bringing this error to our attention! Your feedback on any issue is always welcome!

1(242) 225-3873 or 1(800) 303-3934
www.xmloans.com

The material contained in this newsletter has been prepared by XM Loans Ltd. 404 Bay Street, PO Box N-4443, Nassau, Bahamas and independent feature contributors. The material provided is for informational and educational purposes only and should not be construed as investment, financial, real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.

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