Mortgage Financing In Panama

Can I get a mortgage to buy property in Panama? 

Aug. 10, 2017 – Trevor M.

Yes, it’s possible to avail of financing in Panama—even without being a resident, which is a prerequisite in most countries that do offer mortgages to foreigners. 

Getting a mortgage overseas and liking the terms, however, are two different things.

In most of the world, bank loans come with variable (not fixed) rates… and those rates are higher than Americans and Canadians are used to. In Panama you’re looking at 6% to 7%. 

Few banks outside the States offer loans with 30-year terms; 20 to 25 years is typical. The term can be shorter depending on your age, as banks in many countries won’t lend beyond the age of 70 or 75. In other words, if you’re 65 at the time you apply for a loan, the longest term you can expect is 10 years.

Also note that many countries require local life insurance of any borrower, enough to pay off the loan in case you die before it’s been paid in full. 

If you’re an older buyer, the added cost of life insurance and the shorter amortization period can make the idea of a mortgage… even if you qualify… unattractive.

The best option for financing abroad is often developer financing offered on their projects. Rates will be significantly higher than North Americans would be used to, and the terms much shorter. But developer financing is a convenient way (and often the only way) to enable investments abroad. 

Many of the developers we work with on our Access Panama Property Tours, in fact, offer financing for their beachfront projects. See the Calendar section below to sign up for their next round of tours.

“Kathleen, what are normal or usual down payment and mortgage terms in Panama? For example, I was told 10% down and 25 years. Is that correct?”

Jun. 17, 2010 – Gary C., United States

Right, 25 years is the longest amortization you’ll get in Panama. However, expect to have to put at least 30% down. You may find a bank that will do 80% LTV, but I don’t know of any right now.

Also, expect to put a bigger percentage down for higher valued properties. For example, Scotiabank will do a 70% LTV for properties up to US$500,000, but that drops to 65% LTV for purchases of US$500,000 to US$1.5 million and to 60% LTV for purchases of more than US$1.5 million.

In addition, remember the life insurance factor. To borrow money for the purchase of real estate in Panama, you’ll be required to take out a local life insurance policy, and the local insurance companies will insure only to age 75. This means that, if you’re 60 years old, for example, the best you’ll be able to obtain will be a 15-year amortization.

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