Mortgaging Real Estate Investments in Mexico
Mexico is the most popular country for Canadians and U.S. citizens looking for a second home or retirement investment. The cost of investing, taxes, and maintenance are considerably lower in Mexico. Most foreigners move to Mexico for the culture, food, and the weather, but for many others finances play the key role, realizing their nest egg may not be adequate for them to retire comfortably. You can enjoy a greater quality of life living on a fixed income in Mexico.
One of the advantages of purchasing Mexican real estate is that it will practically pay for itself with the potential to appreciate in value. Whether your intentions are to snowbird in Mexico and rent the property out for the remainder of the year or invest in your retirement, how will you finance your new home? We are frequently asked if foreigners qualify for a mortgage in Mexico.
Most real estate purchases by foreigners in Mexico are cash or equity from their property back home or with a developer’s short-term financing as there are a few financing options in Mexico.
You may be more comfortable dealing with an international mortgage lender but it is important they are located in Mexico and experienced in the Mexican process.
Benefits of a Mexican mortgage:
- Keeping your investments separate, this way you do not risk losing equity from your home property while investing in Mexico or risk your retirement home due to circumstances back home.
- Do not put all your eggs in one basket, rather make a down payment and have your funds available for future investments. Once you are living in Mexico, you will come across other amazing investment opportunities, by not sinking all your savings into one property you are free to invest in other rental properties and generate additional income.
- Perhaps you do not have enough cash for that dream home but it may be a sound investment, it may make sense to finance a portion to obtain a more desirable property.
- Between your lawyer and the mortgage company, you will receive an added level of protection that the title is free and clear of encumbrances. A lender will not hand over the funds until they have proof of a clean title.
- If all your money is tied up in one property it will be difficult to withdraw equity in Mexico, if needed. The process is expensive and difficult and involves paying taxes, loan fees, and the expense of canceling your fideicomiso and creating a new one.
- The interest paid on a mortgage may be used as a tax deduction in Mexico.
It may be more of a challenge to obtain a mortgage through a Mexican bank, as you will be required to have residency and an excellent credit rating in Mexico. However, MexLaw has built strong relationships with real estate and lending professionals and can recommend the best possible lender for you.
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