In recent years, mortgage alternatives have been gradually created through private funds, as well as banks, in order to offer reliable financing in Mexico available to foreigners. However, during the last 10 years, there were no financing programs for foreigners, but now all that is changing with new products, such as “Mortgage One”, here we will share you more about it.
Financing in México
Mexico has remained for years as the preferred retirement destination for Americans and Canadians, due to its low cost of living, its climate and its proximity to the U.S. and Canada. And although many foreign retirees have had enough funds to buy their ideal retirement home in Mexico. For those who haven’t had enough funds, this dream has been unattainable, if they do not have financing options.
In fact, from 2003 to 2014, banking institutions in Mexico offered mortgage alternatives for foreigners, with interest rates between 5% and 6%. But they stopped offering these options. Fortunately, today, foreigners can obtain a loan with a Mexican bank of up to 70% of the total value of the property.
Benefits to get a mortgage in Mexico
In general, as a foreigner, you must follow the same steps to get the mortgage as a Mexican citizen. Interest rates will be higher in Mexico than the US and Canada because someone who doesn’t live permanently in the property represents more risk for the banks of not paying the monthly payments. However, there are several pros to get financing in Mexico in MXN pesos.
- Securing a loan in Mexico will not impact your credit score back home.
- The exchange rate will most likely be in your favor.
- You can earn income in US dollars by buying a property in the Riviera Maya where, if you decide to rent it, your clients will pay you in US dollars, while your mortgage will be in Mexican pesos.
- Having access to extra cash that you didn’t know was available to you.
Steps and requirements for getting a Financing in Mexico
Another point to consider in the process of buying a property and get financing in Mexico is something called the ‘Restricted zone’ which is an extension of land that goes 50 km from any coastline and 100 km from international borders. In this area, foreigners cannot hold title directly when buying a property. But you can set up a Bank trust and you become the first beneficiary of this trust. The Bank Trust gives all the rights to the foreigner buyer as holding fee title.
There are 3 big steps in the process of getting financing to buy property in Mexico as a foreigner:
- A credit authorization must be carried out. To do this, you must send your documents to the financing banking entity, to be able to carry out the subsequent analysis.
- To make the property appraisal.
- And setting up the trust.
Even if the requirements can vary according to the type of financing, the general requirements are:
- A minimum and maximum age limit
- A valid passport identification
- Proof of current address (water, electricity or telephone)
- A birth certificate
- And bank statements or paystubs for the last 6 months.
If you want to learn more about this subject or the details of this mortgage loan, don’t hesitate to contact us. In addition, in Top Mexico Real Estate we have several developments that could be your ideal retirement home or a second home in the Riviera Maya, for example, SÁas-Kib or Starlight.
If you want to know the details contact us.