One of the questions I get asked a lot by clients is about financing in Mexico. Specifically: how can it be done? Can I get financed? And if I get financed, what are the steps to be able to get financing from a Mexican bank?
The statement I hear most often from people is: “There’s no way that a Mexican bank is going to finance me. Canadian and American banks will not finance me because they have no way of using the purchased real estate as collateral like they do back home.”
As a foreigner in Mexico, you won’t have a credit history, but big corporate banks have ways today to finance Canadians, Americans, or members of the European community. There are also some smaller private institutions that offer loans. This will work as long as they can verify the borrower’s credit history.
Mexican banks and financial institutions in Mexico understand that there are a lot of foreigners coming here, not only to live, but also to invest. And they’re arriving with a lot of money. Of course, banks make money by lending it and charging an interest rate. That’s the way they make their money grow. So with foreigners, what they require is proof to make sure that you are solvable in Mexico. The idea behind this thinking is to recreate your financial situation from the country where you’ve been a resident and have accumulated a credit history.
The first thing that the banks need is your credit score. They want to see the annual statements that a potential borrower has declared to their home government for the two last years. They will also ask to see the last six months of credit history from your bank and your bank statements. They will want to know your marital status as well. And they will ask you for your passport, proof of address and determine if you are planning to become a temporary or permanent resident in Mexico.
Most banks in Mexico that offer this type of financing will do so up to 70% of the purchase value of a property. You come with 30% cash down and the whole idea is to pre-qualify you for a mortgage. The Mexican banks will then calculate your solvability and how much they want to finance you. It’s not quite the same way that banks do business in Canada or the US.
If you want to borrow money from a Canadian bank to purchase in Mexico you will have to look into refinancing. If you already own a house, condo or some land in Canada the bank can use that as collateral and give you the money. So technically you won’t have a mortgage in Canada, but the money given to you, based on the principle that your property is the collateral.
Today there are a lot of different options for people from Canada and the United States to get financing in Mexico. And there are some really creative ways to purchase a property here in paradise. If you want to know more, please feel free to contact me at the email address below and I will be happy to help you.
mouad@evokerealestategroup.com