Mortgage Guide
What is a Mortgage?
A mortgage is a loan procured by a buyer to pay off the seller of a piece of property in full. The buyer then owes the lender the total amount borrowed, plus interest and fees. As collateral or guarantee of payment, the lender holds the deed or ownership of said property, until the buyer pays the mortgage off. However, the buyer occupies the property as if it were already his or her own.
There are several types of mortgage loans available, and which is best for a particular buyer depends on his or her financial situation and long term plans. Some people plan to stay in a house for 30 years; others make short-term investments to move up the real-estate ladder. Matching the right client with the right loan requires time and energy on the part of buyer and lender both.
Annuity Mortgage
The annuity mortgage is the most common type of mortgage loans as it offers a fixed monthly payment amount for a fixed period of time.
Monthly repayments are calculated based on two values: Repayment on principle and on interest. Your repayments will cover the interest and a small amount of the principle at the beginning and by the time the loan gets smaller your repayment will cover higher amounts of the principle and a small amount of interest.
Linear Mortgage
The linear mortgage contains a fixed and a variable component. The monthly amount on the capital is a fixed amount and the interest payment reduces as you are repaying the mortgage.
Life Mortgage
During the tenor of this mortgage, you only pay interest, which is tax deductible, while you take out a life insurance to save for the principal. The principal will be repaid at once on the due date of the life insurance policy.
Refinance
Construct your fence, expand your home, build your pool or just upgrade your home by refinancing your mortgage loan.
Refinance often offers the possibility to top up your mortgage loan and extend your tenor, if needed. By doing so, you are able to accomplish your dreams at a lower monthly cost. Refinance also offers the option to consolidate loans in order to reduce your monthly payment.
Term
The maximum term to repay your mortgage loan is 30 years or up to the age of 62, whichever comes first.
What are the requirements
- Proof of source of income for the last two months (pay slips).
- Identification document (Passport, Aruba ID, or Drivers License)
- Appraisal Report from a recognized appraiser in Aruba.
- An employer’s letter or if self employed a company registration of the Chamber of Commerce.
- Employers’ letter should state the following: Your job title, yearly or monthly salary, date started job.
- You work permit (Non-Dutch Citizens)
- Proof of residency (Censo letter or the latest WEB, Elmar or Setar bill in your name)
- Copy of the purchase agreement (if buying a property)
- 20% down payment on the property that is being purchased or value of the construction.
Must be above the official legal age of 21
Must have a stable income
Must be an Aruban citizen
Must have Life Insurance, Fire Insurance, Disability Insurance
Did you know?
- Interest payment on your mortgage is fully tax-deductible.
- Your asset increases in value, when you invest in your property.
- Pay on time and avoid late fee charges.