Your BCB Relationship Manager (RM) is here to help guide you through the mortgage application process and answer your questions.
What is a Mortgage?
A mortgage is a type of loan. It is a contractual agreement between a customer and a bank where the bank lends money to the customer and a property (usually the borrower’s home) is used to secure repayment of the loan and associated fees and interest (the mortgaged property). Over the term of the mortgage, which is usually between 5 and 30 years, the customer must make monthly principal and interest payments to the bank as repayment for the loan (repayment structure further explained below). Until the mortgage is repaid in full, the bank will hold a financial interest in the property used to secure the mortgage.
In obtaining a mortgage a customer is incurring a debt to the bank. Mortgages are a significant financial responsibility and any person seeking a mortgage should obtain independent legal advice so they fully understand all the requirements and obligations expected of them and set out in the mortgage documents.
Things you should consider before applying for a mortgage:
The outstanding balance of the loan.
The base rate is the minimum interest rate that the bank will charge a borrower. It is advertised on the bank’s website, here: https://www.bcb.bm/our-rates/ When the base rate changes, the new base rate will be published on the website and will take effect no less than 30 days later.
The cost to the borrower for the loan. The interest terms will be set out in your Facility Letter. Failure to make regular timely payments may result in a Default Interest Rate being applied to the mortgage.
Variable interest rate
A variable interest rate changes in accordance with the bank’s base rate, which changes due to market conditions. Most mortgages incur a variable interest rate. Under a variable interest rate your payments will increase when BCB’s base rate increases. Currently, BCB only offers variable interest rates for residential mortgages.
The value of the property minus any debt against it.
The term is the length of the mortgage or the number of months or years until the mortgage is fully satisfied including fees and interest. It can range up to 30 years.
A mortgage payment is a periodic amount paid to the bank for repayment of a mortgage loan and to service the interest owed on the loan. The payment is usually paid monthly and will be applied to the interest accrued on the mortgage balance and then to the reduction of the outstanding principal.
A borrower’s history of honouring credit agreements or repaying debts in a timely fashion. A good credit history helps support the bank’s assessment of affordability.
The Facility Letter sets out the terms and conditions of the loan between the borrower and the bank, including the responsibilities and obligations of both parties.
A guarantor is a person other than borrower who provides additional assurance to the bank that a loan will be repaid in full through a contractual document called a guarantee. It is a significant legal undertaking and obligation. If the borrower fails to repay the mortgage, the bank can look to the guarantor to satisfy the debt, which may result in legal action and sale of the guarantor’s assets, including any property owned by the guarantor, to settle the debt. Ultimately, an inability to repay a mortgage can affect the finances of the guarantor.
Why choose Bermuda Commercial Bank?
Bermuda Commercial Bank Limited is the specialist Bermuda bank delivering innovative and effective solutions to provide superior customer experience. We offer tailored financial solutions and personal attention to Bermuda-based clients.
We understand that there are other mortgage options in Bermuda but Bermuda Commercial Bank differentiates itself from the competition in several different ways: