How much do you need to make to get a mort­gage of $1 mil­lion or up?

It’s a com­mon ques­tion that many scour­ing the hous­ing mar­ket of Trinidad and To­ba­go are cur­rent­ly ask­ing them­selves and oth­ers.

Par­tic­u­lar­ly those who are at that time of life when school is fin­ished, qual­i­fi­ca­tions have been se­cured, and the work­ing world has found a space where a ca­reer is be­ing es­tab­lished.

A young pro­fes­sion­al who is con­fi­dent that hav­ing se­cured these goals, the next log­i­cal step can be con­sid­ered: Buy a house.

Ex­cept this is where it gets tricky. Re­al es­tate pages con­sis­tent­ly list­ed new homes at $1 mil­lion and up. De­spite best ef­forts to save, the price points ap­pear to be out of reach.

This is a com­mon re­al­i­ty for many. Pres­i­dent of the As­so­ci­a­tion of Re­al Es­tate Agents of T&T, Sal­ly Singh con­firmed this in a Busi­ness Guardian re­port last month.

“A crit­i­cal con­cern in the cur­rent re­al es­tate en­vi­ron­ment is the af­ford­abil­i­ty cri­sis fac­ing young pro­fes­sion­als aged 25–40. De­spite a steady lev­el of in­ter­est in home­own­er­ship among this group, ac­tu­al pur­chas­es re­main low. High prop­er­ty prices, strin­gent mort­gage qual­i­fi­ca­tion cri­te­ria and lim­it­ed af­ford­able hous­ing op­tions have placed home­own­er­ship out of reach for many,” she said.

This point was fur­ther un­der­lined in the let­ter sent to the Busi­ness Guardian last week, where it was high­light­ed that the ris­ing cost of liv­ing, as well as stag­nant wages, made it in­creas­ing­ly dif­fi­cult for many in that age brack­et to be­come first-time home own­ers.

The let­ter stat­ed, “The un­com­fort­able truth is that most work­ing peo­ple earn $6,000 to $10,000 per month—or less. When the en­try point for a so-called “starter home” al­ready ex­ceeds $1mil­lion, it is patent­ly disin­gen­u­ous to sug­gest that the so­lu­tion lies in “bet­ter prepa­ra­tion” or stricter sav­ing. The dis­con­nect be­tween fi­nan­cial re­al­i­ty and such ad­vice is stag­ger­ing­ly gross.”

The Busi­ness Guardian at­tempt­ed to cal­cu­late what salary range would be re­quired to se­cure mort­gages with­in the price ranges of mod­ern list­ings.

When bank of­fi­cials were con­tact­ed, it was ex­plained there were sev­er­al vari­ables that would in­form this such as debt ser­vic­ing ra­tio and cred­it his­to­ry.

Ac­cord­ing to in­for­ma­tion pro­vid­ed by Re­pub­lic Bank, to pur­chase a house worth $1.3 mil­lion with a 1 per cent down pay­ment of $13,000, the qual­i­fy­ing in­come would need to be $17,200. The pay­ments for 30-year mort­gage on those terms would be $7,716.22.

A house worth $1,500,000 with a sim­i­lar one per cent down­pay­ment of $15,000 would re­quire a qual­i­fy­ing in­come of $19,800. The pay­ments for that 30-year mort­gage would be $8,903.33.

A prop­er­ty worth $1,700,000 with a one per cent down­pay­ment of $17,000, would in­volve an in­come of $22,500. The pay­ments for 30-year mort­gage with those terms would be $10,090.44.

Fi­nal­ly, to pur­chase a house worth $2,000,000 with a 1 per cent down pay­ment of $20,000, the qual­i­fy­ing in­come would need to be $26,400. The pay­ments for a 30-year mort­gage on those terms would be $11,871.10 ac­cord­ing to Re­pub­lic Bank.

The bank said fur­ther that these terms would be based on the as­sump­tion of a 45 per cent debt ser­vic­ing ra­tio with the one per cent con­tri­bu­tion and that cus­tomers have no oth­er li­a­bil­i­ties, such as out­stand­ing loans and cred­it card debts, as ad­di­tion­al month­ly debt pay­ments would al­ter the amount for which cus­tomers would qual­i­fy.

Re­pub­lic al­so said that based on salary, an in­come of $15,000 could se­cure a mort­gage of $1,125,000 with a month­ly pay­ment of $6,750; a salary of $25,000 would qual­i­fy for a mort­gage of $1,800,000 with a month­ly pay­ment of $11,250, while a salary of $35,000 could at­tain a mort­gage of $2,600,000 with a month­ly pay­ment of $15,750.

The Busi­ness Guardian al­so utilised First Cit­i­zens Bank’s on­line mort­gage cal­cu­la­tor to get es­ti­mates based on salary and debt, with a mort­gage pe­ri­od of 20 years, and yield­ed these find­ings.

A sin­gle or joint in­come of $10,000 could reap a mort­gage $709,403.79 with pre-ex­ist­ing debt of $2,500. With­out any debt, such a salary could se­cure $773,895.04. Both of these fig­ures are well be­low the $1mil­lion.

An in­come of $15,000 would land ap­pli­cants just short of $1 mil­lion with an es­ti­mate of $967,368.80 with­out debt or a month­ly debt of $2500. It would drop to $ 773,895.04 with a $,4000 month­ly debt.

A $20,000 in­come could get an es­ti­mat­ed mort­gage of $1,160,842.56 with $2,500 in month­ly debt or $1,031,860.05 with debt of $4,000. How­ev­er, it would drop to $773,895.04 with a month­ly debt of $6,000

Should you have an in­come of $35,000, a mort­gage of $2,128,211.36 is es­ti­mat­ed with­out debt; $2,063,720.10 with $6,000 month­ly debt and $1,676,772.58 with a pre-ex­ist­ing $9,000 debt; $1,547,790.08 with $10,000 debt; $1,289,825.06 with $12,000 and $1,031,860.05 with $14,000 debt.

The T&T Mort­gage Bank has the cheap­est mort­gage rates on the mar­ket with a two per cent pro­gramme and a five per cent pro­gramme.

How­ev­er, the two per cent pro­gramme caps the cost of prop­er­ty be­ing bought at $1 mil­lion.

The re­quire­ments of that pro­gramme state: “Month­ly In­come of fam­i­ly must not ex­ceed $14,000. Bor­row­er(s) must be a first-time home­own­er.” while the “prop­er­ty val­ue must not ex­ceed $1,000,000.”

It stat­ed that “Land own­ers may still re­ceive fi­nanc­ing up to $1,000,000 for con­struc­tion.”

This would mean that most mod­ern list­ings would not be ac­ces­si­ble via this op­tion.

The five per cent pro­gramme how­ev­er, does al­low for pur­chas­es up to $1.5 mil­lion.

The TTMB stat­ed, “Month­ly in­come of fam­i­ly must not ex­ceed $30,000. Bor­row­er(s) must be a first-time home­own­er.”

Ac­cord­ing to the TTMB’s mort­gage cal­cu­la­tor, an in­come of $12,000 with debt of $2,500 could on­ly bor­row up to $638,603, while with­out a month­ly debt, an es­ti­mat­ed mort­gage of $1,000,000 can be achieved.

At $15,000, a loan of $686,301 can be achieved with a month­ly debt of $2,500 and just un­der $1 mil­lion with­out debt, as the cal­cu­la­tor au­to­mat­i­cal­ly in­clud­ed a $49,000 down­pay­ment due to $14,000 cut­off for the two per cent qual­i­fi­ca­tion.

An in­come of $20,000 how­ev­er could se­cure a loan of $1,307,239, with­out debt while a month­ly debt of $2,500 would drop that fig­ure to $ 1,078,473.

These fig­ures ex­clude le­gal fees, which are al­so re­quired to fi­nalise the ac­quis­tion of the prop­er­ty.

Based on the in­for­ma­tion col­lect­ed, it would ap­pear that an in­come of $20,000 or more would be re­quired to re­al­is­ti­cal­ly qual­i­fy for a mort­gage pur­chase of most mod­ern homes in T&T.