Mortgages

Mortgages are readily accessible in Panama for qualified foreigners seeking to finance local real estate purchases. Interest rates are generally slightly higher than those in the U.S., especially for second home purchases. One notable difference regarding the mortgage application process in Panama is that you will need to take out a life insurance policy equal to the loan amount you are asking for in order to qualify.

Panama has the most modern and successful international banking center in Latin America, with more than 85 banks from 35 countries. Panama’s banking laws meet the standards of leading financial centers around the world for transparency and regulation. In deciding which bank to obtain your mortgage from, you will have no shortage of options.

Philip James Realty Company works closely with Scotia Bank, HSBC, and Credit Corp Bank. Note that while terms, conditions, and paperwork needed differ across banks, the differences are generally not dramatic. Also note that while you may be able to get a loan approved in as little as 30 – 60 days, we recommend making sure your paperwork is in good order and giving yourself at least 90 to 120 days for your loan approval.

As an example, loan programs through one leading bank in Panama are as follows (note: terms and conditions subject to change):

Home Mortgage Loans:

Home Purchase/Home Improvements

1. Mortgage: Maximum USD $500K
2. Terms of repayment up to 30 years
3. Up to 80% financing of the appraised value of sales price whichever is lower

Leisure Property:

Summer home

1. Mortgage: Maximum USD $300K
2. Terms of repayment up to 30 years
3. Up to 80% financing of the appraised value of sales price whichever is lower

Interim Residential Construction

1. Mortgage: Maximum USD $500K
2. Terms of repayment: Up to 18 months for interim construction program Long Term Financing: 30 years.
3. Up to 75% of total construction cost of project, including land and blueprints or 100% of total construction cost, whichever is lowest

Land Financing

For purchase of land for residential properties

1. Mortgage: Maximum USD $150K
2. Terms of repayment up to 15 years
3. Up to 50% financing

Who applies

1. Applicants must be al least 18 years of age. The maximum age is 75 years
2. Foreigners that are not living and not working in Panama
3. Foreigners with less than two years living and working in Panama

Required documentation

1. Income evidence. (Last two Income Tax Declarations)
2. ID Card of Valid passport
3. Good Credit Reference
4. Application filled out

Other Requirements

1. Appraisal of the property is requested by the Bank
2. Fire insurance with extended coverage insurance for 80% of the appraisal value of improvements and life insurance for 100% of loan balance

LOAN REQUIREMENTS FOREIGNERS

Home Mortgage Loans

Amount                                    Interest Rate
Up to $150,000.00                  6.50%
Over $150,001.00                    6.25%
Finance:                                       80%
Terms of repayment up to 30 years (75 years old, ending Age).

Requirements:

People earning a salary

1. Original Job letter
2. Copy of Passport
3. Copy of the latest two payroll receipts
4. Last (2) Income Tax Returns ’04 and the ’05 or the ’05 and ’06
5. Signed and Completed Application Form (provided by HSBC)
6. (2) bank reference letters (credit references preferable)
7. Authorization to check credit references

Self-Employed

1. Copy of Passport
2. Last (2) Income Tax Returns ’04 and the ‘05
3. Signed and Completed Application Form (provided by HSBC)
4. (2) bank reference letters (credit references preferably)
5. Authorization to check credit references

**Note: No need to present Bank references if you live on the United Status, also please attach :

• Copy of the last (2) Income Tax Returns ’04 and the ‘05 (Earning a Salary and Self-Employed).
• Copy of the last (2) W-2 Forms ’04 and the ’05 (Earning a Salary).

IMPORTANT NOTE:

A life insurance policy must be taken out for the amount of the loan. This can be included in the mortgage payment if you are under the age of 65. A medical exam may be required to be taken in Panama depending on your age and the amount you borrow. If not taken with the bank, a life insurance policy must be endorsed to the bank by a Panamanian insurance company.