How To Borrow To Buy Foreign Real Estate

How To Borrow To Buy Real Estate In Panama

Banks in Panama have taken to lending for the purchase of real estate based on a cap. This is an arbitrary ceiling put in place in an effort to ward off a crash in the Panama City property market.

Scotiabank is the exception. Scotiabank is ignoring the cap and lending based, not on the sales price, but on a property appraisal. This can be a value for you, as it provides a reality check. If Scotiabank’s appraisal comes back significantly less than the price you’re intending to pay, maybe you’d rethink the purchase.

Scotiabank also lends to buy land and lots. This, too, is unique among Panama banks.

Your loan will be variable rate. This is the norm not only in Panama and not only throughout Latin America but most everywhere in the world outside North America. A foreigner can borrow from a bank to buy real estate in France, for example, or Ireland, but, again, not typically at a fixed rate of interest.

Scotiabank is currently lending at 7.25%. This rate is reviewed every six months but not necessarily adjusted. Scotiabank hasn’t adjusted its rate in a year-and-a-half.

Remember that you’ll need life insurance. Again, this is not a just a requirement in Panama but a typical requirement when borrowing outside North America. You’ll be able to arrange a mortgage that will extend only as long as you’re able to carry life insurance. Typically, this is to age 75, meaning that, if you’re 60 years old right now, the longest loan you’ll be able to secure will be for 15 years.

The banking industry in Panama is solid, in part because of the serious Know Your Client standards it imposes. The flip side to this is that getting to Know Your Client can take time, meaning you aren’t going to be able to open an account overnight. Count on up to two weeks for a personal account, longer for a corporate account.

You don’t need to be resident in Panama to open a bank account in this country. You can open a non-resident account at Scotiabank as long as you can document some connection to Panama—an investment in an apartment, for example, or a business undertaking. You can also open an account if you’re in the process of applying for residency. This is an important allowance, as the current backlog of residency visa applications means yours could be delayed for months. This doesn’t have to mean, however, that your Panama plans must be deferred.

Panama City is an international banking hub, home to more international banks than any other country in Latin America. You can feel spoiled for choice. How do you choose where to do your banking? In more than a decade doing business in this country, I’ve worked with many banks in many capacities. I bank today with Scotiabank. Their customer service is good, and they are probably the most efficient resource if you’re interested in arranging property financing.

Lief Simon



“Kathleen, I just read your Boquete blurb, and, being a resident there, I am glad to agree with it…except, I have to say, life here in Boquete is actually even better than you report. I say this having absolutely nothing to sell you. I am retired (did so at 36 with two young daughters) and have lived in Panama for 4 1/2 years, much of it in Boquete. There are both young and older expats here, as you mentioned, yet I am most impressed by the numbers of families moving in with kids. More and more activities for children are springing up, and a new IB school is taking root.

“The expat community is wonderfully generous as well as entrepreneurial. There is an active Rotary club and other groups helping local kids, elders, and animals. I think the locals in this region are so used to gringos among them that it may be easier to integrate here than in other parts of the country.

“While I have many wonderful things to say about Panama and Boquete (although I am not blind to the challenges), my family and I are off for a new adventure, in Uruguay, where we hope to find a second second home. We are keeping our home in Boquete. Too good to let go.”

— Maryanne R., Boquete, Panama


“I subscribe to your Overseas Opportunity Letter and read your recent report on foreclosure opportunities in Latin America. Do you know if, as an American citizen, I am allowed to purchase foreclosed properties in these countries?”

— Alfred R., United States

Lief Simon replies: “Foreclosed real estate is like any other kind of real estate. If no restrictions exist on the foreign purchase or ownership of real estate in a country, then no restrictions exist on the foreign purchase or ownership of foreclosed real estate in that country.”

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