In recent years, private funds and banks have been gradually creating mortgage alternatives to offer reliable financing in Mexico available to foreigners. However, during the last ten years, there were no financing programs for foreigners. Still, now all that is changing with new products, such as “Mortgage One,” we will share with you more about it.
Financing in Mexico
For years, Mexico has remained the preferred retirement destination for Americans and Canadians due to its low cost of living, climate, and proximity to the US 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 property’s total value.
Benefits to get a Mortgage in Mexico
In general, as a foreigner, you must follow the same steps to get a mortgage as a Mexican citizen. Interest rates will be higher in Mexico than in the US and Canada. 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. 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 Financing in Mexico
Another point to consider when buying a property and getting financing in Mexico is the ‘Restricted Zone.’ 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 three significant steps in the process of getting financing to buy property in Mexico as a foreigner:
- You must get a credit authorization. To do this, you must send your documents to the financing banking entity. Hence, they can carry out the subsequent analysis.
- Make the property appraisal.
- And set up the trust.
Even if the conditions 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 six months.
If you want to learn more about this subject or the details of this mortgage loan, don’t hesitate to contact us. Besides, in Top Mexico Real Estate, we have several developments that could be your ideal retirement home or a second home in the Riviera Maya.