Q: What are the General Terms and Requirements to obtain a Mortgage Loan?
A: The following are the average terms and conditions of mortgage banks in Panama. This mean that specific rates and conditions may vary from bank to bank.

Financing: Between 60% – 70% of the purchase price or appraised market value, whichever is lowest.

Interest Rate: Approximately 6.5%, plus FECI 1% per year.

Amortization: Maximum amortization of 20 years divided into Five (5) years renewable at the Bank’s option for three (3) additional terms of five (5) years each. The maximum amortization period will be subject to factors such as Borrower(s) age and Net Worth.

Security: First mortgage over the property.

Insurance: Banks generally require that the borrower(s) contracts a life insurance policy for the amount of the loan, endorsed to the Bank, and a fire insurance policy with catastrophic extension for the amount of the loan, endorsed to the Bank. The insurance must be underwritten in Panama.

Bank Commission: Approximately 1% of the amount of the loan payable at time of loan drawdown.

Other Conditions:

1. The borrower(s) cover all legal and registration expenses charged by Bank.
2. An appraisal of the property given as security to report an estimated market value at least equal to the purchase price.
3. Opening of a savings account, through which, the payments for the loan will be deducted, with a minimum balance equal to three (3) monthly installments.
4. The customer must meet with the lending officer at the Bank at least once.

Q: Are financing sources readily available for foreigners (non-Panamanians) to get mortgages on property in Panama?
A: There are many banks in Panama that offer financing to foreigners (non-Panamanians) to purchase property in Panama, some of these inclue – Scotia Bank, Banistmo, Banco General, Credicorp Bank, MultiCredit Bank, Banco Nacional de Panama, and others. However, unless the loan is collateralized by some other liquid asset such as a bank deposit, then most banks have the following limitations for financing property to foreigners; (1) the property must be titled through the Public Registry of Panama, (2) the property must be located in approved regions, normally in urbanized regions or on approved development projects in rural areas, (3) the property must have improvements, such as a house, building, etc. with value, (4) the bank will only finance up to 70% of the purchase price, and (5) the bank will require that the purchase price be no more than the appraised value (appraised by a respected appraisal company).

Q: What documentation is normally required for foreigners (non-Panamanians) to obtain financing on property in Panama?
A: Most banks in Panama that finance foreigners require the following documentation for the applicant(s) of the loan; (1) complete photocopy of passport (all pages of passport), (2) photocopy of one additional form of ID, such as a driver’s license, (3) two original financial reference letters, (4) two original commercial, professional, or personal reference letters, (5) photocopy of utility bill showing physical address, (6) curriculum vitae (personal education/work resume), (7) last 2 years financial statements, (8) last 2 years personal income tax returns, (9) photocopy of property documentation (registered title deed & registered survey), (10) original recent certificate of title deed from the Public Registry, (11) appraisal on the property by an approved appraisal company.

Q: What are the interest rates for financing property in Panama?
A: The interest rates are generally right in line with those offered in the USA, however, interest rates really depend on a variety of factors, including; (1) type of property (personal residence, commercial property, investment property, etc.), (2) age of construction (new construction, old construction), (3) term of the loan (short term, long term, etc.), (4) applicants age and status (retired, etc.), and (5) additional collateral offered to the bank as guarantee on the loan.

Q: Are there any special financing deals available in Panama, for retirees?
A: Yes. If you have obtained a Pensioned Visa (this is a type of resident visa for foreigners who have proven that they receive a pension of at least US$500 per month) in Panama, and you are of a certain age, then you qualify for special discounts for interest rates on mortgages.

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