ALL ABOUT HOME LOANS - Introduction
WHAT IS A HOME LOAN ?
A home loan is essentially a loan taken from a bank , or other financial institution , for the purpose of purchasing or constructing a residence for your personal use ( as opposed to a commercial or industrial piece of property ) – this could be a primary , secondary or an investment residence .
It is one of the most common forms of household debt , and because the value of the property essentially secures the debt , home loans have lower interest rates than practically any other type of loan available to consumers .
Interest rates offered by institutions in Mauritius are based on the age and income of the borrower , as well as the repayment period , and may be either fixed or variable . Repayment terms may also differ between loan providers and in Mauritius , these extend up to a maximum of 35 years , for borrowers up to the age of retirement ( 65 years ).
ARE YOU ELIGIBLE FOR A HOME LOAN ?
Lenders use what is known as the LTV , i . e . “ loan to value ”, ratio set by the Bank of Mauritius , to calculate the deposit required on the purchase of a property , and this also affects the repayment amount .
the ratio of the amount
LTV RATIO = of money borrowed : to the appraised value of the property being purchased / under construction
Banks in Mauritius are currently required to ensure :
that the LTV ratio does not exceed the ratio may amount up to
80 % 100 %
of the value of the residential property , for those who are self-employed or contractual employees . for those in full-time employment .
There are 12 banks / financial institutions in Mauritius offering loans for housing purposes – including construction , renovation , purchase of property or refinancing . All lenders have eligibility processes to determine the size of the home loan you qualify for , based on your ability to afford the minimum monthly repayment , which is in turn based on a number of relevant personal and financial circumstances and details , including :
• your personal income , expenditure and existing debt ( s );
• your credit history ; and
• the amount of the deposit you are able to provide , if applicable .
3