Financing a Home at Rivera Cuale
As financing options become increasingly available, the question of how to structure your Rivera Cuale property investment becomes fundamental.
So, you have decided to purchase at Rivera Cuale – that puts you ahead of the curve, but the question is, how far? Choosing the right investment to meet both financial and lifestyle needs is only half of the equation – how you structure that investment can be the difference between your property here becoming a fortunate part of your life, or its being a part of your life’s fortune.
Foreign Nationals purchasing a Mexican property have traditionally been able to do so only with ‘cash’ – meaning that however they were able to arrange financing, from the perspective of the property – and Mexico for that matter – it was paid in full, free and clear.
There are numerous reasons for this. First, Mexican Banks had not established a uniform or accessible mortgage market, nor did they participate in secondary markets in any meaningful way. Mortgage lending has seen major structural improvement within each of the lending processes’ critical dimensions: gauging creditworthiness, backing loans and obtaining funds. Advances in accounting rules, a commitment to capital adequacy, loan classification, auditing, and risk evaluation and management procedures, which have been implemented and refined since 2005, now all meet or exceed international standards and requirements. The government has also made important advances to allow the actual property (generally an appreciating asset) as collateral, and in bankruptcy law uniformity, removing variances municipality to municipality.
The second major reason for cash being almost universal in Mexican property transactions is the requirement that each property sale be brought before a Notary Public who executes a transfer and conveyance to the new owner. This ensures title, movement of the property free and clear of any issues, and that the property transaction is correctly entered into the public register. If the seller is not cashed out, there can be no conveyance, as the seller retains title until such a time as they are paid in full. For the purposes of actually completing the operation, cash has been the least resistive method in the absence of a formal mortgaging system.
In recent years the situation has changed steadily and purposefully. A variety of mortgage products and options are now available to foreign nationals seeking to invest. From both sides of the border, U.S. and Mexican banks have begun offering mortgage products for the purchase of real estate in Mexico, recognizing the security of the purchase system, and the popularity of this investment. U.S. title and escrow companies began entering Mexico in 2004, and since that time, the real estate purchasing process began to take steps to mirror the process in the U.S., adding to the comfort of American (and also Canadian) buyers.
Once inward-looking and crisis-prone, Mexico has transformed itself into a nation that thrives on foreign investment and trade and displays a steadfast commitment to monetary and fiscal discipline. It is consistently an example to other States in crisis, and is becoming a familiar case study in economics classrooms worldwide. Mexico has been crisis-free since 1995, through two potentially turbulent presidential transitions, without experiencing significant financial difficulties—a remarkable achievement, given its economic history.
Mortgages on Mexican property investments do not simply gift someone the ability to purchase. They simply answer the ‘how’ in a positive way for those who probably could have bought two years ago or five years from now. Additionally, they make available the opportunity to approach the market for many more investors. A five hundred thousand dollar investment used to mean one had to be able to arrange $500K. But now, with a mortgage pre-approval, the purchase only requires $100K directly from the investor. The number of people able to manage the lesser amount is exponentially greater than those who are currently capable purchasers. The broader market should allow for positive growth for this sector despite the global economic downturn. The conservative lending rules and qualifications should preserve the lack of foreclosures, while simultaneously generating increases in demand.
While not without challenges, new borrowing options for those involved in the Mexican real estate market and in particular for foreigners acquiring Mexican real estate have created additional demand from new buyers now able to access leverage. Ultimately, good basic conservative lending practices will assist in creating demand for real estate, support valuation, and continue to contribute to economic expansion in Mexico. This creates a beneficial cycle of sustainable growth.
It should be clear at this point that mortgage financing in Mexico is different to that which Americans and Canadians are accustomed. The details and nuances of acquiring real estate with financing are best handled through professional services – that way these nuances can be appreciated and understood rather than dreaded. Investing is a process, and the Mexican experience is a process that is growing and maturing – a safe and interesting series of events well worth looking into.
Pertinent Information
Some of the Mortgage Benefits in Mexico
- USDollar and MXPeso loan interest is deductible on US tax returns (verify with your CPA)
- Loans available in USDollars or in fixed MXPesos
- Loan amount minimums of $50,000 MXPesos and $100,000 USDollars to no upper limit
- Up to 80% Loan to Value
- Low fixed or adjustable interest rate
- 10, 15, 20, 25 & 30 year terms
- Available to citizens of USA, Canada & Mexico and others with FM2 or FM3 visa status and history of income in Mexico.
A further benefit may be found in the combination of US and Mexican Real Estate collateral. This allows potential financing of up to 100% of your vacation home purchase in Mexico. This technique has not only the most favourable rates, but is more flexible, can include contents in the valuation, can pay off faster, and your interest payments are tax-deductible (as always, you should check your specific situation with your CPA).
USDollar Denominated Mortgage Loans for US, Canadian & Mexican Citizens
- •30-25-20-15 year fixed and adjustable rate loans available
- •30% down, rates may vary from 7.75%-8.5%
- •Loan value up to 75% of purchase price
- •Minimum Loan Amount: $100,000 USD
- •Maximum Loan Amount: $5,000,000 USD
MXPeso Loans for US & Canadian Citizens
- 20% down – 11.99% on 10, 15 and 20 Year Terms
- 30% down on construction to permanent loans
- 8.5% Fixed for 20 years
- Pre-payment penalty expires after 3 years
Qualifications
- Minimum FICO credit score 680
- Maximum Debt to Total Income Ratio 40%
Mortgages for Rivera Cuale have never been so easy! At Rivera Cuale you will find qualified agents to help you make your purchase enjoyable – and to assist you in arranging all of the pieces that you will need for financing through reputable mortgage brokers in Mexico or directly with a financial institution that offers mortgage products. For assistance please contact your sales executive or send an email to info@riveracuale.com.
Disclaimer: These materials have been prepared for informational purposes only. Every effort has been made to ensure the accuracy of the information at the time of its inclusion but is not intended to be nor constitutes legal or financial advice. Before taking any action, it is recommended that you consult a reputable mortgage broker, a financial institution or/and your CPA.
Prepared by Marie Talbot
