A house is a must-have acquisition for a majority of Mauritans! Those who have not inherited a family house or plot of land opt for property acquisition thanks to their savings and/or with a loan. Here are a few things to consider before taking out a mortgage loan.
Decide on the maximum budget
The baseline to avoid unpleasant surprises - as from the moment you have started visiting properties for sale - is to set a maximum budget. To better make your decision, have recourse to a professional, a bank or a broker. The target is to better assess what a loan entails: the capital, the interests and the borrower’s insurance. Getting professional advice is wise as he will analyse your financial situation and will help you determine the type of property you can afford.
Define your repayment capacity
Just as in the case of a tenant (who must be able to prove that he earns three times the amount of the rental fee), as a property owner, you will have to show that you have a repayment capacity - i.e. your ability to generate enough funds to make the debt payment - up to 40% if your annual salary is less than Rs 200,000. Given that each loan company/bank has its own system to calculate your revenue and costs involved in an acquisition, one can accept to give you a loan while another can refuse it, considering it to be too risky.
Other important points
Don’t forget to include in your budget: the notary fees, the real estate agency fees, the administrative fees of the funding company, and what you need to live normally (if you are considering an off-budget customisation for instance).
Another key element: the interest rate. This will influence the total cost of the loan and monthly repayments.
To have the best rate, it is advised to reduce as far as possible the repayment period. Even if the monthly repayments are higher, you will benefit from it in the long run as the loan rates and costs will be reduced.