Mortgages and Financing in Panama

Mortgages and Financing in Panama

By in Blog with 32 Comments

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 at 75 years of age.

In order to qualify for the 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 or she could obtain is 15 years ( 75 year old restriction – 60 years old = 15 year term). Loans obtained from a Panamanian bank DO NOT REPORT to your credit report from your home country. Extra debt on your credit report will lower your credit score and make it more difficult to obtain other financing in your home country when calculating your monthly debts. The mortgage will only show on your Panamanian credit and will help establish a credit base for any future financing in Panama.

The following Loan types for purchases and refinances are available in Panama:

  • Residential
  • Commercial
  • Land
  • Construction loans
  • 2nd homes
  • Investment properties

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 14 day turnaround on approvals. During this 14 day period, the bank’s 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 a loan:

  • 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 made

 

Non-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
  • 6% – 7.75% interest rate, Depending on the type of property

Depending on which bank you apply with and the type of loan you are applying for , the terms may vary from the ones above. Panamanian banks offer loans on land, beach homes, city homes, mountain homes, investment properties, and construction loans.

**If you are considering financing your purchase, it  is best to get prequalified for a loan right from the start to avoid delays in the process and risk losing the property to another buyer.

Mortgage prequalifications and approvals stay valid for as long as it takes the project to complete construction. Every 6 months the bank will check to make sure the client income and credit history hasn’t changed and will extend the approval for another 6 months. This process will continue until the property is ready.

As there are over 80 banks in Panama and few bank officers that are able to speak English, finding the right bank and obtaining a mortgage on your own may be a bit overwhelming. Our mortgage professionals speaks English, Spanish, Russian, Italian and Chinese.

About The Author

Kent Davis, founder and Managing Director at Panama Equity real estate, has been widely quoted in publications such as Wall Street Journal, Time Magazine, The Miami Herald and the Financial Times for his unabashed views on the Panama real estate market. Panama Equity is regarded as one of the most active real estate agencies in Panama and Kent’s articles, reports, and market research projects have been syndicated by press agencies including Bloomberg and the Associated Press.   Connect with the Author via: Email | LinkedIn | Facebook | Google+

32 Comments

  1. Rosa Barcelo says:

    Please put me with a good English speaking
    loan agent inorder to be prequalified for home and land loan.

    Regards,

    Rosa Barcelo

  2. Martim Leal says:

    Hello,

    My name is Martim Leal, I’m Portuguese and I have a small company in the hospitality Industry. I have a Hostel in Lisbon – Bairro Alto – called “The Independente – Hostel & Suites” and a small Guest House in Sintra (historical place near Lisbon) called”The House Of The She Pine Tree – Guest House”. We have a restaurant in the Hostel, called “The Decadente” and it was recently voted one of the 20 best restaurants of Lisbon in 2012 by the British magazine “Timeout”.

    My younger brother was recently on honeymoon to Panama cCty and fell in love with “Casco Viejo”. For him and now also for me after everything I’ve seen and read on the internet, “Casco Viejo” is exactly as the “Bairro Alto” in Lisbon and as we pass the dream of having a small hotel in Central America (I lived a few years in Brazil and my wife is Brazilian), I took the liberty of sending you this email so that maybe you can pass me some information about buildings that might be for sale and who knows, help us in this adventure.

    here are our sites :
    http://www.theindependente.pt
    http://www.thedecadente.pt
    http://www.shepinetree.com

    “The Guardian” the English newspaper recently named us as the most luxurious Hostel in europe, follow the link below:
    http://www.guardian.co.uk/travel/gallery/2013/jan/24/10-of-the-best-luxury-hostels-europe-in-pictures

    I read on a website about all the tax benefits that exist in Casco Viejo and look fantastic, are they still standing?

    Well, we would like to make a Bank Loan, maibe in our company’s name. Do you think this is possible. And if yes, what kind of documents do the Bank need to make the credit avaluation ?

    Do you know a loan agent, that can help us in this adventure ?

    Cheers,

    Martim d’Eça Leal

    • Kent Davis says:

      Hello Martim,

      In fact, we do have a great contact for mortgages in Panama. I’ll put you in touch with them in a private email. Thanks for your comments and we look forward to seeing you in Panama soon!

  3. Paul Lussier says:

    Need larger commercial loan which can be structured as debt restructure of existing property or new development in Panama. Please contact me asap. Sincerely, Paul

  4. Kurt Sutherland says:

    Would like to know if there are any properties – condos – that I could buy with only $15,000 down.

    Thanks
    Kurt

    • Kent Davis says:

      Kurt, thanks for your message regarding properties for sale in Panama. To answer your question, most banks require at least 30% down to qualify for a mortgage. That said, if you are considering a property for sale in pre-construction, then $15,000 will be enough for the initial payments.

      Are you in a position to come up with roughly $20,000 additional over the next two years? I’ve just sent you a private message to the email you left as well.

  5. Scott delorme says:

    Need to get pre approved for loan in country of panama.will be selling current house in u s a

    • Kent Davis says:

      Scott, thanks for taking the time to inquire on a loan in Panama. I’ve sent you an email at your yahoo account regarding mortgage and banking information!

  6. Tauni says:

    more information about how to get a loan please.

  7. Wendy says:

    Hi Kent,

    I would also love some more info on mortgages for land in Panama as a non-resident!
    Thanks!

  8. Dwayne says:

    Looking at purchasing vacation home in Bocas Del Toro region. Looking for mortgage lenders for pre-approval for canadian resident. Thx.

  9. Miguel Wallace says:

    I need help purchasing a property in Panama, i have found a home but don’t know who to get a loan from the bank

  10. Justin Kirkpatrick says:

    Kent,

    Hi I am interested in information regarding a loan pre-approval for a property in Boca del Toro. I am not a resident of Panama and only speak English.

    • Kent Davis says:

      Justin, thanks for your inquiry regarding a mortgage on a property in Bocas del Toro. While you aren’t a resident of Panama, that shouldn’t be the issue.

      Would you like me to introduce you to an agent who handles properties in that area? Mortgage brokers, specifically mortgage contacts within the banks operate on a local basis so she would need to put you in touch with someone directly at the bank.

  11. Lisa says:

    I am looking at the Villa 3 story condo in Contadora. What is expected for a down payment. If I have my friendly visa. Could I qualify easier for a mortgage in Panama.

  12. Don Thordarson says:

    My partners and I are considering buying a boutique hotel of Bed & Breakfast on the beach on the Pacific side. We had been considering buying something in the $2,500,000 to $3,500,000 price range and financing the purchase. However, we are all in out 60’s and 70’s. Would the 75 year rule apply on a commercial investment? What if one partner’s wife is mid 50’s would the maximum financing period still be only about 20 years? Any other ideas otherwise, we are going to have to downsize our potential investment. Please advise. Thanks,
    Don

    • Kent Davis says:

      Don, thanks for taking the time to reach out. Im going to answer your email in a private message and include our beaches agent Carlos. In short: yes, banks will finance commercial loans but generally do not take into account in the same way banks do in the US what income is being generated from the business, paying more attention to the principals other sources of income, in which case the age gaps still apply.

  13. Steven Rich says:

    Hi Kent,

    Just want to say that you are doing a great job with this blog and responses to the inquiries. As you know, I publish many online articles about Panama. I read a lot of blogs about Panama for inspirations and sources for ideas for future articles. You blog provides excellent information regarding Panama real estate. Keep up the good work!
    Steven Rich, MBA

  14. Cherrie Preston says:

    Good afternoon,

    I am currently residing in the U.S as a citizen. I am a previous homeowner but the “episode” of 2008 hit me hard. am interested in a possible home purchase in Panama. I have family there and would like to move to be close. Are you able to provide any info?

    I greatly appreciate any help you are able to provide.

    Cherrie

    • Kent Davis says:

      Hi Cherrie, thanks for stopping by and asking your question regarding mortgages in Panama. US Citizen: No problem! Home purchase in Panama: That’s what we do! Most banks will want to see at least 2 years worth of tax declarations showing your income as well as a downpayment on the home of up to 30% these days.

      I’ll send you a private message to your gmail account, ok?

  15. Yani Rosado says:

    Hello Kent,
    I was planning on buying a house in the US six months from now but I am considering just buying a property that I can use for my retirement. I’ve been doing research and Panama seems like a like a safe and affordable place to live. I would like information regarding condos and villas that are financed by the builder.

    • Kent Davis says:

      Yani, thanks for your message. Regarding mortgages in Panama provided by the developer, IE developer financing…those options are certainly available on both beach properties for sale in Panama as well as Panama City Panama condos. I’ll have one of our real estate agents reach out to you to find out a bit more about your preference in terms of area, project type, and price point. Rest assured, there will be some options wherever you choose. Have a good one!

  16. Andrew Scott says:

    Hello Kent

    I am interested in findig more information about mortgages in Panama. Could you please email me some information? Thanks in advance

    • Kent Davis says:

      Andrew, mortgage rates are starting to climb since they are all adjustable and based on Libor +. Right now, rates are around 7% on investment properties and 6% on your final home. Right now, there are still a handful of banks giving mortgages to foreigners so finding a mortgage down here isnt really an issue. It’s just alot of paperwork!

  17. Rachel says:

    I am interested in more information about live-aboard in Panama. How are slips and anchorages handled…as real estate or condos? Can slips be purchased and resold? How do I obtain listings and financing for live aboard or commercial use boats?

    Enjoyed reading your site!

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