Frequently Asked Questions
National Bank of Anguilla (Private Banking & Trust) Limited Loans: FAQWhat is a mortgage loan?
A mortgage is a loan you acquire in order to purchase property. When you borrow money against your property, you have committed to three legal documents:
The Loan Agreement - This document entails the terms and conditions of the loan. It is an agreement to repay in accordance with the terms & conditions.
The Promissory Note - This document is a personal obligation to repay the loan in a timely basis.
The Charge Document - This is the pledge of the property as security. The Charge defines your obligations to your lender, as well as your rights and those of the Lender. You are pledged to repay the mortgage loan, along with additional charge for the lenderÕs security of lending you the money. The cost of borrowing the money is the interest rate specified in your Promissory Note and Loan Agreement. The amount of time you have to pay back the loan is the noteÕs term.
What is a Commercial Loan?
A Commercial Loan is a loan acquired by a company in order to start up a new business or inject capital into an existing business. The money can be borrowed against property, equity within a property or cash. When a company borrows money against property, cash or any other form of security, they have committed to the following legal documents.
- The loan agreement
- Promissory note
- Charge document (if property is used as collateral)
- Pledge Agreement - This is a document signed by the company to pledge its cash as security.
- Continuing Guaranty - This is a document that is signed by the principals of the company, pledging that in the event the ÒcompanyÓ fails to meet itÕs commitments, the principals would be held personally accountable for the outstanding debt(s).
The company may be required to sign other legal documentation depending on the nature of the loan.
What is a personal loan?
A personal loan is a loan granted to individuals to cover personal expenses such as purchase of a vehicle, medical expenses, vacation expenses etc. The money can be borrowed against property, equity within a property or cash. When an individual borrows money against property, cash or any other form of security, they have committed to the following legal documents.
- The Loan Agreement
- The Promissory Note
- Charge Document
- Pledge Agreement
What is a Personal Financial Statement?
A Personal Financial Statement is an un-audited report of your financial position at a given point in time i.e. your total Assets, Liabilities, Annual Income and Annual Expenses. It would also include any investments such as stocks, bonds or shares and insurances. This gives the Lender a portrait of your financial position in order to determine your Net-worth.
What is equity?
Equity is a crucial aspect of home loans. Equity is simply the value of a homeownerÕs available interest on a real estate. Equity can be computed by subtracting the total unpaid mortgage balance and any outstanding liens or other debts against the property from the propertyÕs fair market value.
Do you finance 100% of the value (market value)?
We extend 80% financing for the purchase of undeveloped property and developed property.
How do I know what my loan rate will be?
Rates vary primarily based on the amount of the loan, the type and purpose of the loan. Your credit history and income, loan amount and the value of the asset being used as collateral also impacts on the interest rate you may receive.
How is the closing fees calculated?
Closing fees depend primarily on the amount of the loan and type of loan. It can or may include the following fees.
- Closing cost Ð This ranges from 1% to 2.50% depending on the your equity injection into the project.
- Legal Fees Ð This is charged only on loans that involve Charge Documents and it is also determined by the amount of the Charge.
- Charge - This is a 1% fee that is charged by the Government of Anguilla for the filing of the Charge Documents at Land Registry Department.
- Stamp Duty - This is a fee charged by the Government of Anguilla for all loans that are processed. The fee is $20.00 or US$7.44.
- Bill of Sale Ð This fee is only charged if a vehicle is being used as collateral. It is 1% of the Bill of Sale amount.
- Registration fees Ð This is a fixed fee charged by Government for Charge documents filed at Lands Registry Department.
How long does it take to get a decision after submitting a loan application?
The processing of a loan application takes between one to two weeks after submission of loan application depending on the nature of the loan.
What are rates and terms?
All loans have an interest rate and a term. For example, your mortgage loan may have a 30-year term with a declining interest rate of P Ð3% (9%). As a borrower you will repay the loan in installments over a course of 30 years. You will pay interest on a monthly basis as well as portion of the instalment to principal. The interest you pay monthly will be based outstanding balance on the loan.
What is Prime Rate?
The ÔPrimeÕ rate referred to in the said Promissory Note is the BankÕs rate for 90 day loans to substantial borrowers from time to time in effectÐany change in such Prime rate to take effect at the opening of business on the day specified in the public announcement of a change in such Prime Rate.
How do I calculate the value of my property?
The value of a property can be determined in a number of ways:
- The market value of the property. That is, what a buyer will pay for it, and what other comparable properties in the neighbourhood have recently sold for.
- The appraised value of the property Ð This is determined by that trained or licensed quantity surveyor who would assessed the worth of the property based on inspections, comps, and a thorough analysis of the property and neighbourhood.
What does a lender look at to approve a loan for me?
The lender looks at the Òthe three CÕs of UnderwritingÓ for any potential borrower
- Credit Ð your credit history
- Collateral Ð The value of the property securing the loan
- Capacity Ð Your financial ability to assume and repay your debt.
This gives the lender a better understanding of the risk involved in lending you the money.
What is an Income-to-Debt ratio (Debt Service Ratio)?
Your income and outstanding financial debts make up your income-to-debt ratio. This helps the Lender to determine whether you qualify to repay the proposed loan. In order to determine that the Lender adds your total monthly loan payments &/or the proposed loan and divide with by the gross monthly income to determine your ratio. If the ratio falls within a particular range, you may qualify for the loan.
What is the Loan-to-Value (LTV) ratio and why is it important?
The Loan-to-Value ratio helps the Lender determine the equity that is in your property. Your LTV and equity are crucial because it gives the Lender an idea of the risk involved in lending you the money. A high LTV indicates that the equity in the property is low. For a Lender, that means, the higher the risk of a borrower defaulting on his or her loan. This could mean that the Lender would be less favourable to lend you the funds.
What personal documents do I need to present to the Lender if I am interested in a Mortgage Loan?
The Lender will require the following documents
- Copy of your passport (notarised)
- Two (2) personal references
- A Bank reference
- A property valuation (if purchasing a house)
- A construction estimate (if building a house)
- A income verification letter
- Account statements representing a six month history
- Loan statements representing a six month history
- Credit report
- Latest Tax Returns
What personal documents do I need to present to the Lender if I am interested in a Commercial Loan?
The Lender will require the following documents from the Directors of the company:- Copy of your passport (notarised)
- Two (2) personal references
- A Bank reference
- Police Certificate
The Lender will require the following documents from the Company:
- Articles of Incorporation or Continuance
- Certificate of Incorporation or Continuance
- By-Laws
- Directors Resolution
- Minutes of Organizational Meeting
- Notice of Directors
- Notice of Registered Office
- Latest Annual Returns (if company was in operation for more than a year)
- Business Plan
- Financials (If in operation for more than one year)
- Projected Financials (3 years)
- Security details