When buying Mexico real estate, one viable financing option which has arisen only during the past few years is that of a Mexico mortgage. This option is readily available for most buyers of Puerto Vallarta real estate. The following are some of the advantages and disadvantages of using a mortgage directly from a Mexican banking institution to finance your home or condo in Puerto Vallarta.
The Advantages of a Mexico Mortgage in Puerto Vallarta
- Home Equity – Not that long ago, if a buyer wanted to finance a condo or home in Puerto Vallarta by means of a mortgage, they had to re-mortgage a property back home and use the funds towards a cash purchase in Mexico. The problem with this approach was that it meant that the home equity of the property in the U.S. or Canada was now tied up. Getting a mortgage in Mexico means that the property you are buying itself can be leveraged against the mortgage.
- Higher Loan Value – The value of the loan is also higher if a buyer is leveraging the same property being bought. For example, usually if a property back home is mortgaged to pay for the property in Puerto Vallarta in cash, they will give 50% of the value of the property back home. If you mortgage the home or condo in Puerto Vallarta directly, they will finance up to 70% of the property value.
- Easy Payment Packages – Another advantage is that banks in Mexico have now modernized considerably and now offer easy payment packages, including home insurance if it is not already in place. For buyers who have managed to open a Mexican bank account, direct payment plans can be set up as well.
The Disadvantages of a Mexico Mortgage in Puerto Vallarta
- Interest Rates – Interest rates in Mexico are low, but not as low in the U.S. or Canada. They are usually about 1 – 1.5% higher. This disadvantage, however, is usually fairly well balanced by the possibility of having home equity free on previously owned properties.
- Processing Time – Anyone used to getting a mortgage in the U.S., Canada or many other countries will find the process in Mexico rather lengthy, requiring more paperwork and documentation, and sometimes even frustrating. None of this makes it any more difficult to get a mortgage or changes the final result, but simply makes the purchasing process “busier.”
In the end, most people buying through a mortgage in Puerto Vallarta find that the pros outweigh the cons and that it is a viable and worth-while financing option.
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