Purchasing Real Estate Mexico
- Posted by Agencia Inmobiliaria Bienes Raíces Quintana Roo Real Estate in Créditos, Inversión, News, Real Estate, Riviera Maya, Tips & Advice
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By Leah T. Sakata
Does the thought of owning a home in paradise seem like a distant far off dream or something that you’ve considered but at this point you just don’t think is feasible as you’ve got your money tied up in other investments, are in debt up to your eyeballs or have just come out of a financial refurbishment?
Well, rest assured knowing there are options for you that could be a reason to reconsider your options.
First and foremost it’s important to reiterate that Canadians and Americans can buy property in Mexico.
Financing and Mortgage Options Mexico Investment
In a previous article, I discussed how to purchase a home in Mexico by means of a fideicomiso (bank trust) and other important information.
However, it’s also important to take in to consideration some other significant details and pose the following questions:
1.) Is it a pre-sale construction process? When is the delivery date? `Is it already built and ready to move in?
2.) Are you looking for a house, condo, land or commercial property?
3.) Are you required to pay in pesos or U.S. dollars?
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It’s important to note that 90% of the foreign buyers in Mexico are cash buyers and the real estate market in Mexico is a cash market, which is definitely an advantage since it gives stability and lowers the risk of home loans defaulting.
However, if you do not have the full amount for what you want, there are still several options that a lot of investors aren’t aware of and consist of the following:
Financing for Pre-Sale
This is a very attractive option, particularly for investors as the purchase price is lower, brand new, there is room for negotiation and customization of your apartment unit(s).
There are also reasonable payment options during the construction process which often falls within the range of a 6-18 month delivery. Typical payment plans are as follows:
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i.) 30% down payment 40% during construction 30% upon delivery ii.) 50% down payment 30% during construction 20% upon delivery iii.) 80% down payment 20% upon delivery
Starting at 50% is often when a discount is given.
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Financing and Mortgage Options for Purchasing Real Estate in Mexico
Developer Financing
Some development companies offer their own financing in the Mayan Riviera which are excellent options for foreign buyers who don’t have the means of qualifying for a typical mortgage, nor the capital to follow a pre-sell scheme.
Tulum Country Club a gorgeous, sprawling and ultra green gated community offers up to 5 years of developer financing.
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There are also some options in Ciudad Mayakoba such as Ceiba and Downtown which offer from 24 to 36 months developers financing plans, interest free.
Honestly, why would you pass up this opportunity? When you consider how little interest you’re making in a traditional savings account or even a TFSA (tax free savings account) @ 2.5 %, why not become a homeowner in 5 years or less and rent out your property part or full time?
Financing for Immediate Delivery *
Financing in the U.S. or Canada
– Refinance a new loan (Cash out/Refinance)
– Home Equity Loan : If you own a property you most likely have equity in your home and you can tap into that equity. It is a simple and easy process and you can get something around a 6% fixed interest rate.
– Home Equity Line of Credit (HELOC): This is a more flexible option and you can take money out as you need it. The interest rate might be variable and all will obviously depend on your equity and your credit score.
– Personal loan : Interest rates will most likely be higher in this option.
Financing in Mexico with a Mexican Bank
Foreigners can secure a credit with a Mexican bank of up to 70% of the value of the property appraisal.
Essentially one must go through the same steps as a Mexican citizen in order to obtain a mortgage.
However, interest rates will be higher in Mexico than the US and Canada and in order to qualify for this option, foreigners must have a minimum of a temporary residency status in order to qualify or else undergo a full credit check based on the information available in his/her home country.
Clearly if he/she has poor credit, the likelihood of being able to qualify is slim. On the other hand, there are also several pros of financing your property in Mexico:
- Full legal certainty from the bank with whom you’re obtaining your mortgage.
- Securing a loan in Mexico will not impact your credit score back home.
- The exchange rate will most likely be in your favor and you can derive income in U.S. dollars from your investment.
- Having access to extra cash that you didn’t know was available to you.
- You can deduct taxes on the interest that you have paid on your mortgage in Mexico.
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