Mortgages in the Cayman Islands can be obtained from a local Class A bank as these are the banks which are authorised to lend money. It’s sensible to shop around, however, as rates are competitive and the percentage above prime (from 1%-5%) can be negotiated. The usual term for a mortgage is 20 years, although some banks will offer as much as 35 years.
Interest rates are quoted based on the KYD and USD prime rate published in the Cayman Islands by the retail banks. The prime rate in Cayman normally fluctuates in accordance with changes in the United States Government Federal Reserve rate, also referred to as the “New York Prime Rate”. Banks usually ask for deposits of between 10%–35% as a contribution towards the purchase price or construction cost. Long term interest only mortgages do not exist in Cayman.
Mortgage amortisation terms are normally offered from 15-30 years, but typically not exceeding retirement age. It is worth comparing what kind of deal the different banks will give you, as a variance of 1% or even 0.5% on your interest rate will make an enormous difference. Banks will usually charge between 1-3% above the prime rate, giving the lower percentage rate to those with the greater deposit. Banks also charge a commitment fee of up to 1% of the loan amount and some charge an early repayment penalty.
Establish a meeting with your chosen bank to determine the best possible rate and terms that can be offered. Cayman banks have historically been very cautious when lending money.
Life Insurance Requirements
Not many people know that you must have Life Insurance before purchasing a home in the Cayman Islands, so that, plus home insurance (and hurricane insurance) are things that can affect your finances when purchasing a home. A Property Insurance Policy collaterally assigned to the bank is required for all mortgages and many banks will also require a Life Insurance Policy so the mortgage can be repaid in the event of death, but is not required if the property is 100% privately owned. Your loan officer will advise on their bank’s specific requirements. Numerous providers offer life insurance in Cayman. With life insurance, as with any product of this nature, it is definitely worth your while to shop around and check quotes, coverage terms, reputation and customer service strengths of several providers. Visit our Life Insurance section for more information.