The mortgage market in Mexico has opened up for Americans, Canadians and those of other nationalities in recent years, making a dream vacation home or retirement home within easy reach for many investors. The real estate market has never been stronger in Mexico and MEXLend is proud to be able to offer foreigners financing a home in Mexico a wide array of lending choices including home financing loans in both Mexican Pesos and US Dollars. These mortgages are available for properties from coast to coast across Mexico including popular second home destinations like Puerto Vallarta, Los Cabos, San Miguel de Allende, Tulum and Playa del Carmen.
Both Mexican Pesos mortgages and US Dollar mortgages come with their own specific advantages, and some disadvantages, of which foreign buyers should be aware so that they are able to choose a financing option that will benefit them according to their particular needs or circumstances.
Mexican Peso Mortgages
Mexican Peso loans through Mexican banks are available for all foreigners living in Mexico who are able to provide the correct migratory visa and establish a banking and credit history in the country. If you are a foreigner living in Mexico, most banks will require a migrant residency visa to show that you are in fact a resident of Mexico. However, many foreigners who hold a non-migrant visa, or a work visa, may still be able to secure Mexican Peso financing through many banks should they have sufficient documentation to show their current and past financial situation in their home country.
Some of the disadvantages of Mexican Pesos mortgages are:
• Many banks will not finance 100% of the property value.
• Most Mexican Peso mortgages have a maximum term of 20 years.
• Mexican mortgage rates are usually higher than in the USA or Canada, however the interest can often be tax deductible.
However, some of the advantages are:
• Interest is often fixed for the duration of the mortgage period, which can assist those on fixed incomes (i.e. retirees) with managing their monthly budgets.
• For Americans, a strong US dollar can often create an advantageous financial situation when converting dollars to pesos to make mortgage payments.
• Mexican Peso mortgages generally require low down payments.
US Dollar Mortgages
MEXLend is currently the only mortgage brokerage in Mexico that is able to offer US Dollar home financing to US or Canadian citizens buying property in Mexico, as well as any other foreign national interesting in purchasing Mexican real estate. Essentially, these US Dollar mortgages are loans with a fixed rate which is paid in Mexican pesos, however the loan itself is carried out in the United States, specifically through Alaska Financial LLC, a private lending company.
These US Dollar loans can be used for many purposes including purchasing real estate, home remodeling or even taking cash out of a property already held by a homeowner. They are also available for small businesses or corporations looking to expand their operations in Mexico.
Some of the disadvantages of US Dollar mortgages include:
• Because these loans are flexible and tend to close quickly, they come with a higher interest rate than is found in the USA and Canada.
• It is generally advisable to hold your mortgage in the currency in which you make your income. So for those making the bulk of their income in pesos, a US Dollar loan may not be the ideal option.
But US Dollar loans also come with many advantages including:
• These loans are very quick to close and easier to obtain than normal mortgages in the USA.
• US Dollar loans are not only open to every nationality but they do not discriminate based on marital status or age.
• They are ideal for bridge loans.
• The interest on US dollar mortgages is tax deductible
It is also important for buyers to be aware of the paperwork required for securing a mortgage in Mexico and the associated charges. Some paperwork that may be required would include credit scores, property insurance and legal or notary fees. Buyers will also be required to provide proof of income, credit history, bank references and recent statements, official identification, immigration documents (if applicable), the sales contract for the property, a proof of a down payment, a copy of the deeds and in some cases even a copy of the architectural plans.
The lending landscape in Mexico has never offered more choices to foreigners, but it important for those looking to secure home financing in Mexico that they seek professional advice and guidance on finding the mortgage that ultimately will be the most beneficial for their specific needs and goals. But be it Mexican Pesos or US Dollars, securing home financing puts buyers one step closer to owning the property of their dreams in Mexico.
