When you first start looking for Yucatan real estate, you probably browse through online Mexico MLS listings finding excellent properties within your price range. Yet, what many people don’t know is that they can buy in Yucatan by means of a mortgage from a Mexican bank, opening up more possibilities within their budget.
The following are some of the pros and cons of buying by means of a mortgage from a Mexican bank.
Your Yucatan property can be used as collateral – If you buy your property in Yucatan by means of a mortgage from a bank in Mexico, the same property you are buying can be used as collateral, or “leveraged” against the loan. This means any change in value or market is directly tied to your property and finances in Yucatan and not to a mortgage on a property back home.
Home equity is left free – Closely related is that your home equity on all properties in Canada or the US is left free. This home equity can be very valuable for credit purposes in your home country and is best not tied up with the purchase of a property abroad if you can avoid it.
Your initial cash pay-out is less – If you pay cash straight-up, you have to pay the full price immediately; if you mortgage a property back home, you will usually get 50% of the value. If you get a mortgage in Mexico, they will usually cover 70% of the cost. There are many well-priced properties in Yucatan – both colonial and beachfront – and this means you can begin enjoying the property after paying only 30% of already low listed prices.
Processes and waiting times are longer – There is more paperwork and wait times are longer than what you’re used to from back home. Having taken this into account, it usually not a problem, but must be considered.
Requirements are stricter – The interest and down payment percentages tend to be higher, as is the fico-score requirement. The only part of this that is really necessary to consider for long-term is that payments will also be slightly higher.
Properties usually have to be more than $100,000 USD – There are good properties in Yucatan which cost less than this, but mortgages are only available over this mark, generally speaking.
This option is relatively new and is a very useful tool for buyers who are investing in properties in Yucatan for vacationing, retirement or investment. Talk to your agent to determine if it is a good choice for you.