The products are provided by a major Portuguese bank in conjunction with a Cape Verdean bank in which they own a share. They will enable non-residents to buy property in the islands - something which they were not previously able to do.
Buyers can opt for a repayment mortgage, a payment 'bridge' loan or a self-build product.
The repayment option is available up to 85 per cent of valuation or purchase price, whichever is the lower, and there is also a five year interest-only option. The term is 35 years and the maximum age for repayment in full is 75. Rates are currently the best available in Cape Verde at 3.3 per cent above annual Euribor, most banks are quoting 4 per cent above.
The ‘bridge’ loan is for support during construction and on a stage payment basis. Purchasers can apply to fund 20 per cent of the stage payment profile and absolutely no capital or interest repayments are required for the term of the loan, they are rolled up until the property is complete.
As this loan is pre- private purchase contract, it is secured either through a tri-party agreement with the developer such that they guarantee to put the property in the bank’s name if the client fails to complete, or, the client purchases an insurance policy to cover the loan.
This product has the added advantage of pre-qualifying clients and therefore giving pre-approval for a mortgage at completion, subject to updated underwriting necessary at that stage. Clients can therefore rest easy in the knowledge that they fit the banks’ requirements for completion financing.
The final product is tailored to clients buying plots and undertaking a self build. The loan can be taken for up to 85 per cent of the end value of the property with the funds being released in stages during the construction period. The first stage will be no more than 15 oer cent of the total loan and for the first 24 months payments are interest-only moving to capital and interest after this point. The rate is Euribor plus 3.3 oer cent.
IMS estimates that total costs of purchase and finance will add 10 per cent to the purchase price of a property in Cape Verde.
