Best Places In The World To Retire

Mexicans get mortgages all the time from financial institutions. Mortgages in Mexico have interest rates of 9 – 13% annually. A North American will not get a mortgage here in Mexico from a financial institution.  Instead, he would have to get it from a private source which is called hipoteca (mortgage). 

 

Generally speaking, a North American cannot get a loan from a bank in Mexico. As an example, a client from Texas got a mortgage through a...

Mexicans get mortgages all the time from financial institutions. Mortgages in Mexico have interest rates of 9 – 13% annually. A North American will not get a mortgage here in Mexico from a financial institution.  Instead, he would have to get it from a private source which is called hipoteca (mortgage). 

 

Generally speaking, a North American cannot get a loan from a bank in Mexico. As an example, a client from Texas got a mortgage through a bank here in Mexico because Bancomer (a bank in Mexico) was affiliated with his bank in the United States. He set up the loan with Compass Bank in Texas, went to their sister bank in Mexico, and he got a mortgage. You can’t walk in to any bank in Mexico and say, “I’ve got all this collateral up at home and I’d like to get a mortgage here.” They’re not going to give it to you. 

 

That leaves three different sources to buy a property in Mexico: paying in cash, seller financing, and third party financing (hipoteca.)

 

For example, let’s say you wanted to buy a $300,000 house and you only had $200,000. I could set you up with a couple of people and they would loan you money. I know a guy who charges an annual interest of 12% with a minimum down payment of half the total price. They're not going to give it for 20 years- probably for 10-15 years. It’s still a mortgage. 

 

The seller sells the house to the buyer, and the buyer, either in that deed or in a separate document, creates a document where it stipulates that he still owes $100,000 to the guy who loans them money and the collateral is that property.

 

Let’s say I sell 45 homes a year. Out of those 45 homes, 95% of them are paid in cash. In a year, I may get 2 or 3 people who say, “I really like that house. It’s $300,000 and I have $200,000 right now. My money’s tied up, and I get highly penalized if I pull it out of my IRA. Here’s my offer: $200,000 down payment, seller financing for 2 years on $100,000 anywhere from 6-10% interest.” 

 

You could pay it interest only, depending on how we set it up, or you could set up a mini mortgage but that wouldn't be worth it because most people don’t want to pay the interest and want to pay the lump sum when they have the cash to do so. That’s called the Reserve of Domain.

 

Reserve of Domain is different than a mortgage in that it’s more user-friendly, cheaper to set up, and easier to work with. I’m buying your house, you’re selling for $300,000. I tell you, “Here’s my offer: I’ll give you $200,000 right now at the closing, the other $100,000 I’ll liquidate in two years. I’m going to pay you 8% interest on the money for the two years.” 

 

You have the deed, and the seller and the buyer have a mutual agreement in the deed. That’s what’s called the Reserve of Domain, meaning the domain isn’t totally given until the reserve is met. So when he liquidates $100,000, the seller goes back in to the notary and says, “I’ve received all my money.” He then signs it off before the notary who then goes to the public registry and lifts the reserve out of the actual deed. Now the buyer has a free and clear title of that property. 

 

That is what we deal with here in Mexico. If we’re financing, that’s 90% of what we do. Since the beginning of this year, I’ve had two or three people asking me about mortgages. I told them we can’t get them a mortgage here. If somebody says to me, “Oh I just need short term financing for two years,” then I try to put in the offer and let the seller finance. Some sellers want to do it, and some say no. If they need longer terms like 10-15 years, then I go look for one of the guys who will loan the money.

 

(Village home for over $300,000 USD, Ajijic, Mexico, pictured.)

We live here in Jinotega, in the more mountainous, northern area of Nicaragua, and where there is not the larger concentration of expats that you can find elsewhere in the country.  For me, retiring in Nicaragua is a love - hate relationship. I love the land. I collect and grow orchids and the mountains tend to have quite a few different orchids. I made it a habit to go out on my motorcycle whenever the electric company cuts down trees, so I can rescue the plants. 

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We live here in Jinotega, in the more mountainous, northern area of Nicaragua, and where there is not the larger concentration of expats that you can find elsewhere in the country.  For me, retiring in Nicaragua is a love - hate relationship. I love the land. I collect and grow orchids and the mountains tend to have quite a few different orchids. I made it a habit to go out on my motorcycle whenever the electric company cuts down trees, so I can rescue the plants. 

 

When we first came here, we didn't have people on the streets who are always begging or kids coming up to you and asking for money as a gift. Now, I don't hear the "gift to me" any more. It's just “give me, give me, and give me.” You can't go in to any of the stores that the expats would go to in Jinotega without being assaulted by these people outside who are constantly saying “give me money” when you come out.

 

It wasn't like that when we first came here to this area of Nicaragua. That has been more panhandling in the past 5 years. It's been sliding pretty much going downhill. I guess, we're seeing that there's less and less work available for people. There are more locals who are out of work here. And there is more happening in the way of thefts; neighbors telling us that something was stolen from their property or that somebody's going through their stuff and stealing things. When we first came down to Nicaragua, it wasn't like that. So crime has increased here and there is now more of a “hand-in-your-face give me something” going around.

 

(Home of Joseph Bowersmith in Jinotega, Nicaragua, with lake in teh background.)

Generally, it is heavily legislated that if you are going to build something, you have to build to a certain standard and that standard tends to be good. There are no modern methods of building here. In other words, there is no steel frame, no wooden frame, or that kind of thing. We build using bricks and mortar. The structure is still reinforced with concrete on the structural load bearing parts of the building, villa, or apartment. You would also have a slab on each layer. If it is...

Generally, it is heavily legislated that if you are going to build something, you have to build to a certain standard and that standard tends to be good. There are no modern methods of building here. In other words, there is no steel frame, no wooden frame, or that kind of thing. We build using bricks and mortar. The structure is still reinforced with concrete on the structural load bearing parts of the building, villa, or apartment. You would also have a slab on each layer. If it is a two-story house, you would layer a concrete slab across and then you would in fill with brick. You would lay and run the services and utilities by literally breaking the brick and creating a little tunnel for the electric, the sewerage, and all the plumbing.

 

Generally, construction here in Algarve is very solid.  This is not California in terms of earthquake risk but Portugal is not far away from a meeting of two of the tectonic plates in the Atlantic. The last major earthquake was quite some time ago, in 1755, it was very destructive so most of the modern buildings here are built to earthquake standards or close to it. From a physical construction perspective, you would find very solidly built properties. You will not be knocking on drywall and wooden structures here. 

 

In terms of the quality and finishing perspective, the structures here in Algarve are very good, especially the modern builds. There is a proliferation of marble in Portugal so you will see a lot of buildings or homes that were finished with marble and with big tiles, which are very modern and clean. There is a very modern look to the inside of the house. The bathrooms are modern as well, with suspended sinks and a lot of glass.

 

An average-sized property is 1/3 bigger in Portugal than it is in Spain. Sometimes the size is reflected on the price and sometimes it is not. The pricing depends on the area. We find that people remark that the residential construction here has more space than they would have expected. A typical two-bedroom apartment, for example, would be in the region of 80 to 100 square meters (860 square feet to 1,077 square feet), whereas in Spain, the average is about 60 to 80 square meters (646 square feet to 860 square feet).

 

( Modern Portuguese home, pictured.)