Obtaining a residential mortgage in Panama as a Non Resident

By Martin Lipsman - Panama Mortgage Group

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 a age restriction for applicants at 75 years of age. This means 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 counting 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 today:

• Residential
• Commercial
• Land
• Construction
• 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 documentational requirements, there is a 14 day turnaround on approvals. During this 14 day period, the banks 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 a 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
• 6.25% interest rate ( All non- residents qualify for the same interest rate if approved, rates are not credit score driven)

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.There are over 80 banks in Panama and few bank officers that are able to speak english, obtaining a mortgage on your own directly with the bank may be a bit overwhelming. Its best you find a mortgage specialist located in Panama that has access to all of the banks and can find you the best terms and loan programs available.