Obtaining a Mortgage in Panama as an Expat

I was contacted recently by a firm in Panama City that recognized the difficulty for many expats in navigating the loan system in Panama. With their ability to speak multiple languages and their background in mortgage origination and corporate financing, they’ve developed a growing business of facilitating the loan process in Panama.

As they explained to me, since there is a language barrier and it can be very difficult to get things done here without physically being in Panama, many buyers get dragged into a 6-8 month long process where they are constantly asked for more documentation. They end up making unnecessary trips to Panama for paperwork, and left in the unknown. They say they are especially useful when clients are not physically there in the country and/or cannot speak Spanish very well and need to close on their property.

The following is information provided by Panama Mortgage Group to help give expats some idea of what to expect in the loan process. Their website is www.PanamaMortgageGroup.com. You can also contact Charles Rabinovich of the company via email at charlie@panamamortgagegroup.com or by calling 917-972-0393.

Obtaining a Mortgage in Panama as an Expat

As the majority of the investors buying in Panama are not residents of the country, the Panamanian banks are easing restrictions on lending to foreigners. As of today non-residents qualify for up to 70% financing of the purchase price for no longer than a 25 year term. There is an age restriction for applicants up to 75 years of age. 

Age Restriction

This means in order to qualify for a full 25 year term, you must be 50 years of age or younger. If an applicant is 60 years old for example, the maximum term he/she could obtain is 15 years ( 75 year old restriction – 60 years old = 15 year term).  

Credit Reporting Regarding Expat’s Home Credit

Loans obtained from a Panamanian bank DO NOT REPORT any loan or payment information to your credit bureaus from your home country. Extra debt on your credit report will lower your credit score and make it more difficult to obtain new financing in your home country. The mortgage will only show on your Panamanian credit and will help establish a base for any future financing in Panama. 

Documentation needed for an Expat

When applying for a mortgage, the bank will ask you for a number of documents detailing your financial background. It is imperative you provide them with everything they ask for. Any missing documents will cause a delay in the approval process. Once the buyer has satisfied all of the banks documentation requirements there is a 15 business day turnaround on approvals. During this 15 day period the banks credit committee will analyze your case based on your income and repayment abilities. Once approved a loan term sheet will be issued by the bank for the buyers review. If the buyer agrees to the loan, he or she signs the term sheet, returns it to the bank, and is issued an irrevocable promissory letter for the loan amount approved.

The following documentation is required for the approval of mortgage as an Expat:

•  2 Photo ID’s (Passport and driver’s license)
• 2 Bank reference letters
• Tax Returns for the last 2 years
• Last two pay stubs (does not apply to self-employed)
• Asset Verification (bank accounts, retirement accounts, equity in your home, stocks, bonds, etc.)
• Purchase Contract
• Personal Credit Report
• Job reference letter
• Proof of any down payment madeNon-resident applicants can expect the following loan terms and conditions if approved:
• 25 year term maximum
• 70% of purchase price financing
• Life and Fire insurance required
• 7.5% interest rate (rates are not CREDIT SCORE driven. Banks do look at credit history but do not focus on score.) 

Interest Rates

Depending on which bank you apply with, and the type of loan you are applying for the terms may vary a bit in Interest rate. Panamanian banks offer loans on land, beach homes, city homes, mountain homes, investment properties, construction loans and Condo Hotel loans for up to 70% of the purchase price. There are over 80 banks in Panama and few bank officers that speak proper or any English whatsoever. Obtaining a mortgage on your own directly with the bank may be a bit overwhelming. Its best you find a mortgage specialist located in Panama that has access to all of the banks and can find you the best terms and loan programs available.

No Comments Yet.