MORTGAGES? KNOW EVERYTHING THEY DON'T TELL YOU ABOUT THEM
Around the world, mortgage application systems are one of the fundamental modalities to be able to develop real estate investments. And although hundreds of people in Panama have participated in these systems, few are aware of how they work.
Panama is undoubtedly one of the Hispanic countries where the mortgage application process is easier for people. In addition to this, Panamanian mortgages are currently maximized by the high number of real estate projects with interest rates ranging from 2% for houses or apartments with a sale price up to 100% of the same and with payment terms that can reach up to 35 years.
WHAT FACTORS ARE TAKEN INTO ACCOUNT FOR THE ASSIGNMENT OF A MORTGAGE LOAN?
In Panama, the amount of a mortgage loan is usually calculated based on the income of the family group or the individual applicant, as well as his or her particular profession. In addition to this, the allowed indebtedness must never exceed 35% of the net income of the family group, only for the expenses of the price of the house.
In particular cases, where the application is made by a person with very good banking references, it is possible to designate up to 35% and 20% for personal expenses of the applicant; which would mean that the maximum indebtedness of the monthly family income allowed by the bank is 50%.
WHAT DOCUMENTS DO YOU NEED TO APPLY FOR A MORTGAGE IN PANAMA?
Once we understand the variables that are taken into account for the assignment of this type of credits, it is time to consider what documents will be requested to the person opting for this; and despite the fact that the bureaucratic requirements for the application of a mortgage loan in Panama vary depending on the bank in which the request is made, the most common is that these may be:
- Copy of personal identification.
- A second identification document.
- Filling out the mortgage loan form.
- Letter of authorization to obtain credit references from the Panamanian Credit Association.
- Copy of the model of the promise of sale contract.
- Work letter if you are a salaried worker and, in case of being independent, copy of the declarations of income of the last three years or movement of bank account of minimum.
- Copy of the social security card.
- In the case of being a foreigner, residential mortgages in Panama have a different development than in other countries; an example of this can be seen when making comparisons between the North American mortgage system and that of this nation.
That is, mortgage lenders in North America calculate the applicant's ability to pay based on his or her credit history, while mortgage lenders in Panama rely on a loan-to-value analysis and the ability to pay based on the household's net income.
The most common paperwork requested by Panamanian banks is usually:
- Mortgage loan application.
- Complete photocopy of passport.
- Photocopy of additional photo identification document.
- Recent utility bill showing your home address.
- Applicant's complete CV.
- Two original letters of bank references.
- Two letters of commercial or professional references.
- Bank statements for the last 12 to 24 months.
- Income Tax Returns for the last 2 years or Audited Financial Statements.
- Explanation of the source of income indicating the reason for the purchase of the property.
- Proof of immigration status.
- Appraisal of the property made by an expert appraiser authorized by the Bank.
- And finally the receipt of the purchase contract and support of the down payment.
- Once the requested mortgage loan is approved, the mortgage acceptance documents must be signed at the bank to which the loan application was made, and thus finally be close to the completion of the application.
These processes can be a bit complicated for many people not familiar with the financial functioning of Panama, which is why, in most cases, it is recommended to have the advice of an expert, which beyond being an expense, represents a helping hand for any buyer interested in betting in Panama.
