Obtaining a home loan in Mauritius

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Very often, buying a real estate property in Mauritius requires bank financing by means of a home loan. Targeting both Mauritians and expats, a wide variety of banks and financial institutions on the island offers tailor-made solutions regarding various types of real estate projects.
Definition of a home loan
Also referred to as a mortgage loan, a home loan, according to investopedia.com, is a loan given by a bank, mortgage company or financial institution for the purchase of a real estate property, construction and refurbishment a current home.

General features of a home loan:
Obtaining a home loan requires a case-study of the borrower by the financial institution in question:

  • A mortgage loan has to be guaranteed by a death and disability coverage
  • In some cases, a pledge on the financed asset is asked by the bank or financial institution
  • Depending on the banks (or financial institutions), interest rates may be fixed or flexible
  • The duration of the loan depends on the age of the borrower. Normally the maximum duration varies between 25 and 30 years, but this remains at the bank’s discretion.

Note: Most of Mauritian banks or mortgage companies offer loans in Mauritian Rupees to Mauritians and residents whose salaries are in Mauritian Rupees, with interest rates fluctuating around 7%.


Required documents*:

Acquisition of real estate property:

  • National ID Card or Passport
  • Birth Certificate
  • Marriage Certificate (if applicable)
  • Sale Agreement Insurance (fire, cyclone and other perils) or
  • Letter from syndic (Not applicable if you only want to buy land) Construction, renovation or extension:
  • National ID Card or Passport
  • Birth Certificate
  • Marriage Certificate (if applicable)
  • Property Deeds
  • Construction Permit
  • Construction Plan Insurance (fire, cyclone and other perils) or
  • Letter from syndic (Not applicable if you only want to buy land) Refinancing
  • National ID Card or Passport
  • Birth Certificate
  • Marriage Certificate (if applicable)
  • Property Deeds Insurance (fire, cyclone and other perils) or
  • Letter from syndic (Not applicable if you only want to buy land)
  • Loan Balance Certificate

The above information refers only to MCBhome loan offers and is solely for information purposes.

Criteria for obtaining a home loan
Debt-to-income ratio
Mortgage lenders are concerned with a borrower’s ability to repay the mortgage. To determine if he qualifies for a home loan, they will consider your credit history, your monthly gross income and how much cash you will be able to accumulate for a down payment. Mortgage lenders are chiefly concerned with your ability to repay the mortgage. To determine if you qualify for a loan, they will consider your credit history, your monthly gross income and how much cash you’ll be able to accumulate for a down payment. . In Mauritius, regarding home loans, the maximum reimbursement should not exceed 40% of the borrower’s monthly salary if his salary is less than Rs.200 000 per month. Each and every bank or financial institution has its own rules in performing a borrower’s case-study. (Source: http://www.bankrate.com).

Disposable income
Disposable income remains a key indicator to evaluate a household’s standard of living in calculating its capacity to reimburse a home loan. In other words, it is the sum remaining after deduction of fixed charges like rent, insurance, water, electricity, telephone, heating bills, taxes, transport fees and credit repayments.

Home loans for foreigners in Mauritius
Regarding foreigners, banks or financial institutions tailor their offers to the borrower’s currency. For instance, if the currency is Euro, the rate will be based on the Euribor, one of the main reference rates ofmoney market benchmark for the eurozone. Banks will finance only up to 70% of the real estate property excluding notary fees and registration fees. It is much easier for expats to obtain financing from local-based banks (financial institutions) compared to those in their country of origin due to the fact that Mauritian-based banks are more likely to take their IRSor RESunits as guarantees, especially that these units are sold under the VEFA (Vente en état futur d’achèvement), providing the banks with a ‘garantie bancaire en fin d’achèvement’. In other word, the IRS/RES units provide the bank a guarantee for the completion of the property, when the property is under construction.

Sources:
mcb.mu
blog.evacogroup.fr
wikipedia.com
investopedia.com

Posted by
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