Deciding to own a place in the sun in Cape Verde may be one of the biggest decisions you might ever make so it is essential to obtain as much advice as possible before making a commitment. Experts should be contacted to make the correct property selection together with legal and financial advice.

Non resident mortgages are new to these islands and as a result the products available are very basic. In the UK we are used to self certified, buy to let and interest only deals. The situation on the islands regarding finance is very simple and does not have the sophisticated range of products that we have in UK.

Mortgages here are full status – you have to provide proof of your income – and are capital and interest repayment loans with variable rates. As yet none of the big international names we know in the UK, such as HSBC and Barclays, are operating in these islands, most of the banks are either Portuguese or Cape Verdean.

AVAILABLE PRODUCTS

• 50% of the lower of the bank’s valuation or purchase price
• Interest rates from 4-7.5% depending upon development, bank’s criteria and borrowers financial circumstances
• 5-25 year terms, up to age 65
• All income declared must be supported with tax returns, P60s, payslips and bank statements or if self employed accounts and tax returns
• UK mortgages and loans are used to calculate affordability
• If borrowing €100000 the repayments will be between €613-817 per month over 20 years.
• No interest only is currently available
• Mortgages available for purchase, release of equity and construction

These are the current deals available as all of the banks have recently reviewed, and reduced, their terms the due to the world economic climate. Hopefully as the financial markets improve the banks will review their criteria again.

For example, if the purchase price is 100000 euros the local banks will lend 50000 euros over 20 years the repayments will be between 307-410 euros per month. At the end of the 20 years the debt will be fully repaid.

Costs of about 6.5-7% will also be incurred to purchase the property, based on the purchase price. This consists of 3% transfer tax, 2% Notary and 1.5% registration fees, the balance for miscellaneous fees. These are all paid on completion of the property together with the bank opening fee of usually 1-1.25% of the mortgage amount, plus a valuation fee of around €300. There is usually a penalty for early repayment of the loan of between 1-2% depending upon the bank.

Buying in a foreign country can be confusing and complicated due to the various banking systems, language barriers and the distance between yourself and the country in which you are buying. By using an experienced Broker you can be confident that you will save you time and money by obtaining the right mortgage and advice tailored to your needs, taking the worry out of the process for you.

NEXT STEPS

Obtaining your finance locally means that the pound / euro exchange rate fluctuations will have no affect.

In order to give you the confidence to buy you can find out your borrowing capacity before committing to a purchase. By analysing your details it is possible to confirm whether you match any of the bank’s criteria and if needed apply for an approval in principle. This will give you a realistic budget to work with and will ensure you view properties which are affordable.

Once you have a chosen property then a full application can be made – at this stage documentation is needed from the client, their lawyer and the developer and it is the role of a Mortgage Broker to co-ordinate everyone involved in the process and ensure that the most suitable bank is used to match the needs of the client.

GENERAL ADVICE

• If your lawyer has power of attorney to sign for the property on your behalf it is easier to also give them power of attorney to sign for a mortgage at the same time. It is very complicated to arrange this from the UK
• Make a will – it is advisable to arrange for your lawyer to draw up a will which will cover all of your assets in Cape Verde. Main reason for this is it saves having to get all of the UK probate documentation translated, allowing the Beneficiary immediate control of the assets.
• Ensure you have the necessary insurances in place to protect your property
• If you rent out the property you will have to lodge a tax return in Cape Verde