Mortgages and Property Finance Options
Information about mortgages, home loans and funding a property purchase in Panama...
Panama's banking center has recently established financing opportunities that now include foreigners. It's expected that 80 million baby boomers will retire over the next 10 years, with around 5 percent relocating to Latin America. As a result, the local Panamanian banks are opening their doors and welcoming foreigner financing. Typically Panamanian banks only offer financing towards titled properties where improvements have been made, infrastructure already exists, and the property is located in an urban or developing area.
When comparing financing in the United States to financing in Panama, buyers will find that the terms and rates are very similar; however, the application process differs greatly.
In North America, home financing is largely based on an individual's credit history, whereas in Panama the banks emphasize the buyer's ability to pay as well as the property's loan to value ratio. As a result, Panamanian banks require that the buyer provides extensive documentation to prove both income and the value of the property that they are buying.
Applying for property finance in Panama as a foreigner involves a long process which requires a great deal of document preparation and organization.
Panamanian banks require these general documents in order to open and account and start the loan process:
- Photocopy of entire passport including all stamps
- Photocopy of one additional photo ID
- Utility bill showing the buyer's name and address
- Personal education and work resume
- Two original bank reference letters
- Two original commercial reference letters
- Last two years of tax returns
- Letter explaining the buyer's income sources and reason for the purchase
- Appraisal of the property
- Purchase contract
- Title deed of the property
- Completed and signed mortgage application
Applying for a mortgage will require a considerable amount of personal time to meet with the bankers, complete applications and organize the required documentation.
The Property Market
Panama's real estate market is changing constantly. With over 2,000 new condos to open in Panama City in 2012, for example, the prices will almost certainly change with demand by year and by area.
There is no Multiple Listing Service (MLS) in Panama, so researching the available properties for sale can be challenging. It's important to browse several real estate and developer websites, and acquaint themselves with the big names in an area, the take the time to calculate the average price per square meter in each area of interest. This will help buyer determine the projects or units which offer competitive value for money.