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Chris Frochaux of Chris Frochaux - SERVMOR REALTY – Best Places In The World To Retire User Account
It is possible for a foreigner to obtain a home mortgage in Panama, with mortgage terms up to 25 years, with a minimum down payment of 30%. Certain restrictions apply however... While banks are largely responsible for the real estate crash in the United States, due to their eagerness to extend credit to anyone and his dog without credit verification, Panamanian banks are much more conservative, and this accounts for the healthier condition of the local real estate market. For example, mortgages are guaranteed by a life insurance policy, as well as fire insurance.
 
Although not mandatory, it could be a good idea to open an account in a local bank providing mortgage financing. Contrary to persistent rumors, it is not difficult to open an account in Panama - provided you bring with you the complete set of required documents. Consequently, you should research those requirements in advance, before you travel, since they vary according to each bank. You may need to bring proof of employment or copy of your tax returns for the last two years, for example.
 
Usually, banks finance 70% of the purchase price, but that can turn out to be 60% in certain cases, such as Venezuelan citizens. To qualify for a mortgage, the owner must be less than 75 year old. The maximum term is 25 years, and the math is simple: while a 50 year old qualifies for a 25 year loan, a 60 year old qualifies for a 15 year loan, and so on. You can purchase a property under your personal name, or in the name of a corporation. Selling Panamanian corporations is a cottage industry in Panama and many attorneys will be delighted to provide this service. Simply be aware that the last fiscal reform has eliminated an old loophole, which avoided the payment of transfer taxes when selling a property: therefore there is no fiscal advantage to transferring the stock of a corporation, versus selling the property. 
David Btesh of Pacific Realty / Pacific Developers – Best Places In The World To Retire User Account
Condo in Pacific Point Tower, Panama City, Panama – Best Places In The World To Retire – International LivingHome mortgages in Panama vary. The houses that are for the locals cost US $50,000 - $70,000, and the government gives them $10,000 with 30 years to pay. If you are buying a property, then you go to a bank, the procedure is the same as with American mortgages. Today, the interest rate is running 4.5% - 5% for 10-30 years. 
 
The length of a loan for commercial property will start at 5 years - 7 ½ years. They don’t go too much, or you could get a 5-year extension. It’s a normal procedure of registering. Once the land is registered in your name, the bank lets go of the money to the original owner. You’re pretty protected all the way around. Again, you have to be wise and do your legwork and do it legally, and then you are well protected.
 
You can get mortgage even as a foreigner. They will mostly ask you, “How are you going to return the money?” So what you would have to do is show them your income. If you’re an expat or retired, and you have a check from the US government, they’ll take that as a loan against your mortgage. Then the bank in the US would send the money monthly, or whatever you arrange to pay mortgage. That way, the bank won’t have to chase you, you can be really transparent, and everybody’s happy all the way around. 
 
The down payment varies from builder to builder, so, on my high-end property, I take down 30%, because the bank doesn’t like to lend more than 70% on a million-dollar property. You really have to show them that you can afford the monthly payment. You have to show them that income to get the loan.  
 
(Condo in Pacific Point Tower, Panama City, Panama, pictured.)
Mike Vuytowecz of Inside Panama Real Estate – Best Places In The World To Retire User Account
Home in Valle Escondido, Boquete, Panama – Best Places In The World To Retire – International LivingIn Panama, they discriminate a bit. First of all the down payment is a minimum of 30% of you’re a foreigner. The mortgage term is typically between 15 and 20 years and once you get over 65 or 70 years old, you will find that they won’t likely give you a mortgage at all. They will also require that you have a life insurance policy if you have a mortgage. It could take months to get it because everything in Panama goes very slowly since the bureaucracy in Panama is quite a bit more than what expats are used to. So if you apply for a mortgage, you will actually receive the loan in anywhere from 3 to 6 months. The interest rates right now for a foreigner are between 6.5% and 7.5%. Everything is in US dollars.
 
The rates are higher in Panama than in the US and I guess it’s because that’s what the markets will bear. The Panamanians could get loans with very low down payments and very low rates, which are pretty much tied to their income. I guess the reason for this is that the foreigners could afford the higher price so they require a bit higher down payment and we pay a bit of a premium on the interest rate. It is also the law of supply and demand. There is not really an opportunity to get a better deal anywhere else. If you don’t pay cash then you have to deal with their program.
 
One of the philosophies that Panamanians have is definitely to help other Panamanians.  They make it as easy as possible for the locals and they take into consideration the economics of the person getting the loan.   Also, foreigners have demonstrated over a period of time and most of them pay cash, anyway. If you really need a mortgage and you don’t have any choice, the price reflects that.
 
(Home in Valle Escondido, Boquete, Panama, pictured.)
Wee-Yiong Fung of Prestige Panama Realty – Best Places In The World To Retire User Account
If you are a foreigner, a Panama bank will ask you for between 10% to 30% down payment.  The three main items the bank will use in order to determine how much down payment to require are: 
  • The strength of your credit.
  • Does the bank feel that, as a result of having you as a customer, it can have a longer-term relationship and get more of your business in the future?
  • Any referral you may or may not receive from a source the bank feels is credible.  For example, if I refer you and I tell the bank that you are a good credit risk or that you’re a good candidate for future business with the bank, they will lower the amount of down payment required.  That’s how things are done in Panama; through personal relationships. 
The term of the loan will depend on the amount of the down payment, your credit strength and income, and the age of the person taking out the loan.  For example, if a person is 60 years old and wants to buy a home for $250,000, the bank would view a 30-year loan as risky, because, in order for the loan to be paid off in full, the person paying on the loan would be 90 years old.
Jose Broce of Broce-Pinilla & Asociados – Best Places In The World To Retire User Account

The banks here in Panama prefer young professionals as there is less risk, so loan applications from young professionals usually get approved.

When applying for a home loan, there are several requirements and checks that you have to pass. You will have to go through an interview at the bank. If you want to buy an apartment, you should at least have a contract of the property that the developer is offering you. It does not have to be signed. You just need to show the contract to the bank in order for them to have an idea about what you are looking for, how much you need, and so the bank knows that the collateral is worth the investment. Then the bank will ask for your last 2 years of income tax returns for them to see how much money you are making. If you have any other income that you can prove belongs to you, it is advisable to declare that with the bank. Even if these are just side businesses and no matter how small the earnings were, the bank will still consider that as income.

Then the bank will ask you for a life insurance policy that will back up the loan. They will have a doctor see you, too. The bank will also analyze your credit. They will check if you are a good payer and how many loans you have. The bank will ask you if you will get the property under your name or under a corporation. The bank will request for an appraisal of the property and a third party performs it. The prices they will get are real value, market value, and “venta rapida” or the quick sale price. Venta rapida is what the bank will use in giving you the loan. The down payment is figured out as a percentage of the quick sale price. The bank will approve or decline the loan based on the results of these checks.

The term of the loan depends on your age and income. The loan term is usually only until you are 70, but there is a way around that. You may opt to have a co-mortgagor or you may get a life insurance policy. That way, the bank is secure that when you are gone, the bank will still get paid. 

Bill Brunner of abc realty panama – Best Places In The World To Retire User Account
Generally speaking, in Panama, mortgages must be paid off by the time the mortgage payer is 70 years old. So, for example, if you’re 61 years old, the longest term mortgage you will receive is for 9 years. There are some instances where they will go beyond the age of 70, but as a rule of thumb, 70 is pretty much the limit. I guess if you have a life insurance policy on the mortgagee you could go beyond 70 years old.
 
The down payment on a mortgage is about 20% - 30% here in Panama.
Paul McBride – Best Places In The World To Retire User Account
Banks in Panama are generally very conservative.  For a foreigner, getting a home mortgage is possible but the paperwork and income verification process can take several months to approve.
 
The lending policy varies from bank to bank, but there are some similarities in the application process.  The banks will require an appraisal of the property you’re considering buying.  This evaluation is done by a certified appraiser selected by the bank.  Once the value is established and accepted by the bank, a down payment of at least 20% is usually required.  Depending on your income, a larger down payment may be required.  Banks prefer verifiable employment income over investment income.  For example, if you have rental properties and plan to use the income from those properties to service the loan, the bank may or may not accept that as a valid source of income.  What the banks are looking for is predictable income like wages or guaranteed pension payments.
 
The interest rate for a home loan in Panama is higher than in the US, Canada and Europe and the term of the loan is usually 20-years or less.  Banks have a maximum age restriction for loans.  The term of your loan won’t exceed 75 years minus your current age.    So, for example, if you are 60 years old, the maximum loan term you’ll receive is 15 years.  The older you are, the shorter the loan.  You may also be required to purchase a life insurance policy for the amount of the loan naming the bank as the beneficiary.  Current interest rates are around 6% depending on the bank your work with.
 
For foreigners buying a home in Panama using a mortgage is possible but it takes time and patience (and a good source of income) to qualify.  The turn around time for a home loan can take as long as 4 to 6 months depending on the lender and terms vary greatly from bank to bank.  If you’re considering a mortgage you should investigate all the options available at the local banks.
Moises Montero Randino of Montero Randino - Attorneys at Law – Best Places In The World To Retire User Account
Home mortgages in Panama may vary a lot depending on the applicant (age, local / foreigner, status and income), and also the bank.  Depending mostly on the applicant's age and proof of income the down payment and terms will vary from bank to bank.
 
For example a Panamanian in the mid 30's with good income could be asked to pay 10 -20% down payment at a 5-7% interest for a term of 25 - 30 years.
Yolany Alvarado of ProPanama – Best Places In The World To Retire User Account
Home mortgages in Panama are a little bit different from US mortgages.  While you can secure a US mortgage with a good credit score, in Panama a debt income ratio is a essential in the approval of a loan.
 
For foreigners, most banks are willing to approve a loan based on:
  • 70% financing based on the lesser amount of the sales price or appraisal.
  • 20-30 years financing, depending on the age of the applicant.  In Panama, most banks will give you a loan to the amount of years resulting from the difference of 75 minus your age at the time you are receiving the mortgage.
 So, for example, if you are 50 when you sign the promissory purchase agreement and the condo is delivered to you 2 years after (now you are 52), you will be looking to a mortgage of 23 years, even you had received a bank letter approving a 25 years mortgage.
 
Rates are between 5.25%-6.50%  
 
If you have a pensionado visa, you will not have to pay a 1% tax over the mortgage rate.  Another good reason to become a Pensionado in Panama :)
 
 
 
Bob Gugel of Origen Real Estate Panama – Best Places In The World To Retire User Account
 I thought it would be helpful to provide the terms and conditions for residential mortgages of one reputable bank in Panama.
 
GENERAL CONDITIONS:
  1. Appraisal of property being financed. Cost of appraisal will be assumed by bank. Bank's percentage of financing is based on the lower of the appraised value or purchase price.
  2. Opening of a saving or checking account, through which, the loan payments will be deducted.  The account should maintain a minimum balance equal to three monthly payments.
  3. Borrower's life insurance for the amount of the loan endorsed to the bank.
  4. Fire insurance policy covering 80% of improvements made to the property given as security.
  5. Borrower to cover legal and registration expenses.
 
DOCUMENTATION REQUIRED:
  1. Job letter and copy of two pay slips (for borrowers currently earning a salary).
  2. Copy of the last two income tax returns and/or audited financial statements.
  3. Two picture identification cards.
  4. Asset verification (copy of bank account statements, real estate titles, bonds, common stock, etc.)
  5. Copy of Purchase and Sale Agreement
  6. Two copies of public utility bills of your current primary residence (water, phone, electricity)
  7. Two bank reference letters from recognized banks, addressed to Panama bank.
  8. Copy of a Reference Credit Report from your country of residence (Equifax or Transunion for USA or Canadian residents).
 
Note: The amount of loan will determine the percent of loan to value. Also, the age of the borrower cannot exceed 75 years.
 
 
Allen Rosen – Best Places In The World To Retire User Account
The information provided by the other contributors is correct, but you should also know that there are two mortgage rates in Panama. First, there is the normal market rate, which is currently about 6.5% in most banks for residential mortgages. Then there are the government subsidized mortgages at approximately 2%, which are available to citizens and permanent residents for new homes in government registered projects priced below $130,000.
 
If you are not a permanent resident and do not plan to buy a new home under $130,000 in a government registered project, you will have to pay the market rate for a mortgage. In such cases, it is probably cheaper for you to borrow money in your home country -- typical rates in Canada  and the US are now hovering around 3%-4% -- if you have assets there against which you can borrow. This is obviously a better choice for those able to access credit at home.
 

 
Rafael Alvarado of Rafael Alvarado / Attorney / Real Estate Broker – Best Places In The World To Retire User Account
The terms and down payments of home mortgages in Panama usually depends on the Bank. The most common terms are:
 
1. They loan up to 80% of the value of the property. If that is the case, the client needs toy pay the other 20%.
 
2. The usual mortgage can be from 20-25 years
 

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