Foreign Buyer Tips: Financing a Retirement Home in Mexico is a guest contribution from real estate expert Anthony Gilbert.
Foreign homeowners may have dreams of a retirement home in warm and exotic locations like Mexico. And there’s plenty of reasons. A residence in Mexico is often cheaper to buy and maintain than one in the United States and Canada. Travel back to visit friends and family is relatively inexpensive. And enjoying an improved quality of life is easy, as food, restaurants and healthcare is often more affordable than back home.
Those worried about their nest egg and retirement savings not stretching far enough are looking into investing a retirement home in Mexico. They also get to explore another culture and an area’s local expat community. So, what do out-of-country buyers need to know about financing this option?
How Much do Foreigners Need as a Down Payment?
Canadians and Americans are used to the idea of taking out a home mortgage loan and putting down a certain amount as a down payment. This helps establish some initial equity in a home. Unfortunately, lending institutions in Mexico are not offering mortgage to foreigners as of now. This means Americans and Canadians living in their own country looking to purchase real estate in Mexico.
Prospective homebuyers will therefore need to put down the entire amount of money necessary to purchase a home. They can also look into other financing options. The sale of a primary home or other property in the US or Canada may allow enough money to cover the costs of a purchase abroad. It will also help put an additional sum into savings.
Where are Foreigners Looking for in a Retirement Home?
As safety and affordability may be concerns, it is good to start looking at areas that have drawn Americans and Canadians in the past. This may be helpful for those who hope to tap into a large expat community in Mexico and explore the local area. Some popular locations include San Miguel de Allende, Chapala, Puerto Vallarta and Playa del Carmen. These locations offer many properties for different budgets. The cost of living also varies. So make sure to shop around to find the best match for you.
Once you settle on an area, you need to choose the right neighborhood. You may want to consider a fixer-upper in a higher-end neighborhood to get many of the amenities you are used to enjoying at home. Or maybe you prefer an affordable brand-new unit in a newly developed area.
Finally, depending on the area of Mexico you are interested in, you may be able to own a property either by a fee-simple title or by using a bank trust or Mexican corporation. Those buying using an individual retirement account, 401(k) or with the help of financing may want to look into the bank trust option.
Make sure to ask your agent for the best option for your needs.
Can Individuals Finance a Home in Mexico with a Lender in the United States?
Buyers will find that financing options exist for them, to their surprise. ConfiCasa Mortgage International offers financing options and is U.S.-based with office locations in Chicago and Houston. There are exclusive loan programs, assistance with escrow services, title insurance, appraisers, construction consultants, notarios publicos and legal representation. Their products focus on helping Americans and Canadians finance the purchase of a second home or retirement home in Mexico.
Those looking to take out a loan through available mortgage products can make a minimum down payment of 20 percent and enjoy tax deductions on the mortgage interest. There are specific limitations that may apply. Closing costs may also be tax deductible. Speak with a tax accountant as regulations and tax laws often change. Such discussions can help one learn of the most recent information on potential deductions and restrictions when using a mortgage loan in one’s native country to buy a retirement home in Mexico.
It isn’t impossible to own a home in Mexico to retire into. In fact, authorities are often working hard on adapting the laws and permits to allow more foreign investment into Mexico. By following the previous information, the possibility of becoming a homeowner in paradise is within reach. We’ve got plenty of properties around the country for anyone looking to retire.
And remember, at Top Mexico Real Estate…we make it happen!
Anthony Gilbert is the owner of The RealFX Group. Anthony specializes in real estate, real estate marketing, managing the team and achieving set goals.
