Financing your Los Cabos Purchase

Los Cabos is seeing an influx of people looking to secure their piece of paradise in this era of Covid-19.

 

Finding a home you and your family can spread out in is possible; whether you prefer a gated community such as El Encanto de La Laguna, beach condo like Las Mananitas, or a one-of-a-kind oceanfront estate in Palmilla. Los Cabos is typically a “want to buy” market unlike the USA and Canada where people need to buy, it is mainly a cash market so financing is not often considered.

Casa Valhalla in Palmilla

One of the differences in the Mexican real estate market from other North American markets is mortgage financing is not quite the same as their neighbours to the north, however, there are some options.

Seller Financing

A seller may offer financing registered as a lien against the bank trust (Fideicomiso) – the seller and buyer agree on a monthly payment, interest rate, term, and the property is the collateral – a background check, credit rating and references are often requested. A mortgage company such as MexLend can help set up this as well as any other type of loan; in this case for both parties.

Investment Fund Financing Options

There are some Mexican investment funds that offer loans to foreigners. The cost of the loans is higher; however, they work very well for many buyers as it puts them in the position to offer cash to the Seller, which can be beneficial when negotiating the sales price and aiming for a quick closing date. 30% to 40% down payment is the norm. These are generally 0% interest rate loans, and they charge an administrative fee in lieu of interest. Terence Reilly of Mexlend says “two of the great benefits of financing the property in Mexico is that because of the structure, you are paying down the principle from your first payment. Most regular mortgages are front-loaded for 5 years with interest and you don’t even touch the principle. Also, these loans are in Mexico and do not affect your credit nor ability to obtain credit in your home country. So, if life throws you a curveball, you still have the ability to handle those emergencies”. These loans are in Mexican pesos, but there are a few US dollar loans.

Construction Loans

So you have found your dream homesite and decide to build – yes there are construction loans set up based on the building schedule. The bank releases funds to the builder as the construction progresses and a timeline set for the completion date. Ask about a no prepayment penalty.

There are also Pre-Construction options. You pay the developer a 40% down payment and a 3% lock-in fee and the lender will hold the loan open for you up to 36 months until the home or condo is completed and ready to transfer title.

A line of credit or home equity loan from the USA or Canada will often offer better interest rates and can be an option for purchase. Interesting fact – a Mexican loan will not show up on credit reports in the USA or Canada.

Always Use Escrow

A third party company such as Global Escrow Solutions or TLA International Escrow Services. Always be sure to get your bank trust (Fideicomiso) and if you have a mortgage lien, and pay it off – be sure to have the trustee bank acknowledge and release it from the bank trust.

Casa Alegria Punta Ballena - Exclusive Listing The Agency Los Cabos Real Estate
Casa Alegria Punta Ballena

Are you looking to purchase vacation or investment property in Mexico? Contact – The Agency Los Cabos.

 

Janet Jensen

+52.624.141.6726
janet@theagencyloscabos.com

More posts from Janet

Property Taxes in Los Cabos

Property Taxes in Los Cabos

January in Mexico is more than just pleasant weather. It is time to pay property taxes and to receive a ...
read more
Los Cabos Multiple Listing Service – MLS

Los Cabos Multiple Listing Service – MLS

Los Cabos Multiple Listing Service: The MLS BCS (multi-listing service Baja California Sur) is the most comprehensive multiple listing service ...
read more
A.M.P.I Los Cabos

A.M.P.I Los Cabos

A.M.P.I Los Cabos is the Mexican Association of Real Estate Professionals, formed in 1956, and has members in more than ...
read more

 

0 0 vote
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Recent Posts

Property Taxes in Los Cabos

/

Property Taxes in Los Cabos

January in Mexico is more than just pleasant weather. It is time to pay property taxes and to receive a …
Read More
5 easy outdoor trips for your 2021 travel bucket list.

/

5 easy outdoor trips for your 2021 travel bucket list.

Los Cabos is a popular Mexican municipality located at the southern tip of the country’s state of Baja California Sur …
Read More
Hiking spots you can't miss on your next Cabo Vacation.

/

Hiking spots you can’t miss on your next Cabo Vacation.

The Baja California Peninsula is a thriving beach town laden with art, cultural excursions, music, and outdoor adventures …
Read More
JOIN THE A-LIST
Sign up to receive The Agency’s email newsletters and be the first to learn about open houses, exclusive events, research & markets reports, and more.

Based out of San Jose del Cabo, BCS, Mexico, The Agency is a Luxury Real Estate brokerage, an independently owned and operated licensee of UMRO Realty Corp.

Los Cabos

Carr. Transpeninsular Km 24.5. Plaza Esperanza Local 23
Cerro Colorado, ZIP 23405
San José Del Cabo, B.C.S.
+52.624.146.9200

Todos Santos

Bonifacio Topete
Centro, ZIP 23300
Todos Santos, B.C.S.
+52.612.145.0852

La Paz

Pichilingue La Paz
Lomas de Palmira, ZIP 23010
La Paz, B.C.S.
+52.612.175.0125

Contact Us

© 2020 The Agency Los Cabos, All Rights Reserved.

SHARE / INTERESTED?
X

Get More
Information

Share this


Thanks for your message, we will contact you soon