How to Choose the right Mortgage In Bermuda & How to Get Pre-Approved

Friday Mar 18th, 2022


Purchasing a home is one of the most thrilling experiences of your life. Additionally, it is almost certainly the most expensive. Unless you have a cash pool the size of a swimming pool, you'll need to obtain a mortgage to assist in financing the purchase of a home.

Applying for a mortgage can be stressful, especially if it's your first time. The good news is that by following these steps, you can easily get pre-approved for a mortgage to finance the purchase of your new Bermuda home. 

What is Mortgage Preapproval?

When looking for a mortgage, you can examine the choices provided by various lenders. Mortgage lenders have a procedure that may enable you to:

  • know the maximum mortgage amount you could qualify for estimate your mortgage payments 
  • lock in an interest rate for 60 to 130 days, depending on the lender

The mortgage preapproval process can be broken down into several parts. Mortgage prequalification and mortgage preauthorization are other terms for the same thing. Each step that a lender provides has a particular definition and set of requirements.

The lender examines your financial situation to determine how much money you can borrow and the interest rate during this process. They will likely request personal information, other financial papers, and a credit check. More importantly, this procedure does not guarantee that you will be approved for a mortgage.

Steps to Applying for a Mortgage in Bermuda

  • Do your research.

You want to make sure the lender you finally choose is right for you early in the mortgage application process. A mortgage might last up to 30 years; therefore, the relationship is crucial. Perform your due diligence and select a lender who best meets your home financing demands.

  • Choose a mortgage type.

For today's homebuyer, there is no one-size-fits-all mortgage solution. To suit the needs of a wide customer, lenders offer a variety of mortgages. So, while picking on a lender and a mortgage type, you'll be presented with information regarding 15-year and 30-year mortgages, adjustable-rate mortgages, and, if you qualify, mortgages guaranteed by the Bermuda government. The most important thing is to get the right mortgage kind for your situation.

  • Gather your paperwork.

The loan application procedure is exactly that: a procedure. You'll need to provide documentation proving your creditworthiness and persuade a lender why they should trust you to repay potentially hundreds of thousands of dollars. This form will demonstrate that you have a consistent source of income, list your assets, and detail your financial commitments and debts. Before you begin, have these documents ready.

  • Seek preapproval from various lenders.

"Congratulations on being pre-approved for..." We've all received loan and credit card preapproval letters in the mail, but they're not the same as a mortgage preapproval. That is something you must apply for. Preapproval will offer you an indication of how much you can borrow and the type of mortgage you'll accept. Do this before putting an offer on a home since it informs the seller that you have the bank's support.

  • Engage a lawyer

You will be requested to designate a lawyer to conduct the application process on your behalf after receiving your preapproval. Please check that the firm is on the list of your potential mortgage lender permitted law firms before instructing a lawyer. Your lawyer will be requested to draft a Sales and Purchase agreement, which should be delivered to your mortgage lender once completed.

  • Property evaluation

Your lender will instruct an approved Property Appraiser to appraise your property. This report is used to determine the property's current market value. The charge for this treatment is often between $500 and $800. During your initial meeting with your mortgage consultant, you will have the choice to select an appraiser depending on the mortgage lender's mode of operation. 

So, What's Next?

Your mortgage lender will decide whether or not to approve your mortgage offer once you've supplied the paperwork that supports your application.

  • Review your offer

If you are selected, your lender will contact you to schedule a meeting to discuss the offer. After that, you can sign your mortgage application letter as well as your offer letter. This paperwork will include the mortgage's closure, payment details, and other pertinent information.

  • Get the legal work done.

Your lawyer will be in charge of completing any remaining legal components of the mortgage. This involves making any necessary inquiries and delivering the signed agreement to Credit Services, who will give final instructions on closing the documents.

  • Complete and exchange

After completing all of the legal processes, you and your seller can set a completion date and exchange contracts. After that, you'll need to get buildings and contents insurance. All of these goods are available through your mortgage lender. However, you can buy them from a third party if you choose.

How Much Does It Cost to Buy Property in Bermuda?

When it comes to buying a home, one of the most common complaints is unexpected fees. These can take various forms, ranging from legal expenses and insurance to the actual expenditures of moving. Before beginning the procedure, be sure you've researched these recurring charges and budgeted for them.

The following are the most common costs to be aware of:

  • Property appraisal 

A property appraisal is a professional review of the condition of your prospective home. It is used to establish the property's current market value and discover any potential issues such as structural damage, water damage, or inadequate upkeep by the previous owner.

When you apply for a mortgage, your lender will ask you to hire an approved property appraiser to provide this evaluation on the property you intend to purchase. During your initial meeting with your mortgage consultant, you will have the choice to select an appraiser. This treatment typically costs between $500 and $850.

  • Legal fees 

You'll be asked to direct a lawyer to handle various portions of the mortgage application procedure on your behalf after you've been pre-approved.

This involves preparing and submitting the essential papers and documentation, such as your Sales and Purchase agreement, as well as making any necessary inquiries. The cost of these services will vary depending on the law firm, but you should be able to acquire a price during your initial appointment.

  • Land tax 

Every homeowner is obligated to pay land tax twice a year. The Office of the Tax Commissioner calculates your land tax rate based on your property's annual rental value (ARV).

You are required to pay land tax if you are:

  • the only owner of a property
  • a property's life renter
  • a three-year or longer leaseholder
  • a regular (yearly or monthly) tenant of Bermuda's government-owned property

More information regarding land tax rates can be found on the Government of Bermuda's official website.

  • Negotiation fee

You pay a negotiation fee to a lender to arrange and process your mortgage. It's also known as a lending fee. When you take up a mortgage, the negotiating costs you'll pay will vary based on your account status and the kind of your loan. 

  • Insurance 

You must acquire buildings insurance for your property before your mortgage agreement can be finalized. This protects you from the cost of repairing or rebuilding your home if it is damaged. You can also acquire home contents insurance and mortgage protection insurance, while this is optional and not necessary to complete your mortgage application.

Home contents insurance covers your home's contents in the event of a fire, flood, theft, or other potential risk factors. This includes your furniture, appliances, clothing, and other personal belongings. Mortgage protection insurance protects your family by repaying the remaining debt on your mortgage in the event of your death.


This article is for educational purposes and the figures used throughout the article are estimates and subject to changes across lenders, government agencies, and vendors. Like with any financial decision, it is important that you reach out to a local mortgage professional for proper guidance before applying for a mortgage.

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