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Mortgages in Mexico

Mortgages in Mexico not Readily Available

mortgages in mexicoFinancing in Mexico has always been an issue. Although there currently is some financing you will not find anything comparable to what you can get north of border. However, for some people the Personal Loan approach below might be beneficial, especially if using for short term while trying to sell your home north of the border or waiting for other investments to mature.

Vendor take-backs are also not common but on occasion are done. Rent to purchase agreements are almost unheard of.

Overall, creativity in real estate or financing is not very present in Mexico. Therefore, mostly people purchase with cash or do an equity take out from their home north of the border or borrow from their bank back home on a line of credit to purchase in Mexico.

U.S. or Mexican Bank Financing

For a few years we did have G.E. financing in Mexico but for whatever reason, they no longer have a presence in Mexico.

U.S. or Canadian banks will not finance a property in Mexico using the Mexican property as collateral as would be too difficult for them to foreclose from a distance if someone defaulted.

Mexican banks do have mortgages but for foreigners to qualify they need to earn their income in Mexico. The interest rates are 10% or more.

Private Financing

Since it is difficult to find a place to put your money to earn a decent rate of return, individual investors are offering private financing by way of personal loans in order to get a higher than average return on their money. The minimum loan is $25,000 U.S. with a term up to 5 years. They will finance 50% of the value of the property. Consequently they require no credit report or appraisal as there is lots of equity in the property should something go wrong. They do require proof of sufficient income to cover the payments. The interest rates vary from 10 to 13% and some also have a set up fee of 5%. It is not cheap. However for Americans, you are able to write off the interest on a property in Mexico just as you would on a property in the U.S.

A traditional mortgage is registered on the property for security.

Vendor Take Backs

There are a few developers that do offer Vendor Take Back financing. Interest rates and terms vary depending on the developer but would be someone similar to the private financing above.

Occasionally an individual homeowner will agree to do a Vendor Take Back and often the terms and conditions are a little better than the private or developer financing.

 

 

 



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