Updated – August 2017
It is not an easy process to get a mortgage through a Panama bank.
It is tedious.
The amount of documentation that is required will leave you flabbergasted.
God forbid you forget to include a document, that can bring the whole process to a crawl.
Big Developments Can Be An Exception
The exception is if you are buying a property from a developer that already has a relationship with a bank.
These are usually the large developments, especially those who sell property in the pre-construction phase.
Then your loan can be granted in a matter of days.
But most property in Panama is not is those kind of developments.
UPDATE: It is now somewhat easier for foreigners to get a mortgage in Panama.
You still need alot of paperwork done. And they will check your credit report back home. But expats have had good luck going through Scotiabank for a mortgage loan. Scotiabank has loans for Panama resident and non-residents. Check out this link for more.
Some expats have had good experiences going through bestmortages to find a good mortgage loan.
You Do Not Have To Be A Resident To Get A Mortgage Loan
But you do need to be under 75 years of age (see below for more).
Top Factors To Qualify For A Loan
- Your Ability To Pay
- The Loan to Value Ratio
In North America, qualifying for a loan is all about your credit history.
However in Panama, the banks focus on your ability to pay and the the property’s loan to value ratio.
What this means is that Panamanian banks require massive amounts of documentation.
- Verify your income
- Determine the value of the property you are buying
Land That Can Be Approved For A Mortgage
Generally, Panama banks will only give loans on land that is
- Has had some improvements
- In an urban or developing area
Typical terms and requirements of a mortgage
- The loan term must end by the time you are 75 years old.
- So, if you are 65, you can only get a 10-year loan, but if you are 55, you can get a 20-year loan.
- Life insurance policy that will pay off the loan in the event of your death.
- Fire insurance to cover the amount of the loan.
- You must physically appear in the bank’s offices to finalize the loan
- 25 year term maximum
- 70% of purchase price financing
- 6.25% interest rate
Note, All non- residents qualify for the same interest rate if approved, rates are not credit score driven.
Documents That Are Usually Required
If you think you will be applying for a loan, you should bring these documents with you to Panama.
- Photocopy of entire passport including all stamps
- Photocopy of one additional photo ID
- Utility bill showing your name and address
- Personal education and work resume
- Credit Report
- Proof of any downpayment made
- Two original bank reference letters
- Last two years of tax returns
- Asset verification (bank accounts, retirement acounts, equity in your home, etc)
- Letter explaining your income sources & reason for the purchase
- Appraisal of the property
- Purchase contract
- Title deed of the property
- Completed and signed mortgage application.
Some banks require that you have a Panama bank account for at least 6 months before you can be given a mortgage.
Of course, every bank has slightly different requirements.
The Credit Committee Review
Once all the required documentation is in the bank’s hands, it goes to the bank’s credit committee.
They have 14 days to analyze your loan application. Once approved, the buyer gets to review the terms.
If the buyer agrees to the loan, he signs it and returns it to the bank.
In return the bank issues an irrevocable promissory letter for the approved loan amount.
17 Alternatives to a Local Bank Loan
If this seems daunting to you, you should read my “18 Ways To Finance Real Estate In Panama” post.
We Offer Financing
Also, if you are interested in one of our properties, we offer financing.