Reader Gloria left this question in the MEXLend comment section:
“”We have a new condo in Nuevo Vallarta that we bought pre-construction in 2005. We now have possession, but because of cost overruns and devaluation of our home in the states we have run out of money to finish and furnish our new home. We have also run up credit card debt in the states all related to our condo in Mexico.
Is it possible to get a loan on our Mexico condo to finish it and pay off out credit cards? What is the interest and payments on a 30 year fixed of 300,000?”
David Schwendeman, CEO of MEXLend Mortgages replies:
“Many of our clients right now are doing exactly as you suggest. You can absolutely get a loan against your Mexican Property to pay off other debt and/or furnish or improve the property itself. There are several factors, though, which will determine how Mexlend would proceed in arranging financing for your particular situation:
1. You mention having “Possession” of the Property without having formally transferred title. This is farily common in Mexico but without having transferred title – your loan will likely be treated as a “purchase loan”. If you had already transferred title we would be treating it as a “cash out” or “re-finance” loan. Basically, once you are approved individually for a loan – we would then document in writing that you have already paid cash to your developer and that the “down payment” is in his hands. Banks typically require 20% to 30% down. That said, anything over that minimum down payment requirement can be re-imbursed to you at closing. So if your condo cost $400,000 and you’ve already paid $400,000 to the developer – you can get back up to $320,000 at closing. $100K is the minimum loan amount allowed and anything in between would be ok too.
2. In the event you have taken title to the property and we arrange for a “cash out” loan the amount you can take out could be slightly less. Banks have gotten a bit more rigid about cash out refinancing and they often only allow 50% to 70% of the value on the property.
Lastly, interest rates right now start at 7.5% and cap out at about 9.5%. Therefore, depending upon which loan program you ultimately qualify for – your monthly payment on $300K US would be somewhere between $2,250 US and $2,850 US. The rate and terms you are offered are contingent on your credit score and income. If credit is good and income is high in relation to the loan – you’ll likely see a lower rate. If credit scores are borderline and income is low in relation to overall debt – you’ll see a higher interest rate.”
So Gloria, I hope that answers your questions and feel free to contact MEXLend for a no-obligation consultation to see if taking out a loan is right for you!
