Mexico Mortage News - Private Lending Sources

With the phenomenal growth in Real Estate around Banderas Bay the Tribune is helping sort through the confusion by having your personal Real Estate and financing/Mortgage questions answered by our local experts – Wayne Franklin, President of one of the Bay’s most trusted Real Estate Agencies Tropicasa and David Schwendeman and Terence Reilly, Founder’s of MEXLend, an industry-leading Mortgage Broker based in Vallarta. We invite you to e-mail your questions regarding buying or financing Real Estate in Mexico to buyinginmexico@hotmail.com.

Q:
“Are there any private lending resources for buying in Mexico?” Timothy Wilson

A:
Yes indeed - there most certainly are private lenders available for real estate purchases in Puerto Vallarta, just as there are in the U.S., Canada and elsewhere. Some may be part of a legitimate consortium of investors; however, those are few and far between. A good friend or relative may also be in a position to lend you the money for your purchase and for some this is a viable, secure way to go. However, obtaining private financing absolutely falls under the category of “caveat emptor” or “buyer beware”. Private Lending, whether through an investment group or individual is not subject to the rigid guidelines of either US Banking or Mexican Banking and therefore can subject the borrower to extra risk.

In addition interest rates are usually much higher – double digits rates are the norm. Terms are typically much shorter too – typically 3, 5 or 10 Years. Most Private Lenders are not in a position to carry mortgage paper for the long term the way a bank can. The monthly payments on a 3, 5 or 10 Year Loan will be much higher than those of a 20, 25 or 30 Year Loan.

Unless you are borrowing from a trusted source, you are completely comfortable with your payment schedule and have read the fine print it is always wise to stay away from anyone who is going to be lending you money at an exorbitant interest rate. The rates for legitimate lending in
Mexico range from 7.5% to 10.5% for US dollar loans and 9.9% to 14% for peso loans. These seem like a veritable bargain compared to the private lending rates.

Remember, when you obtain a mortgage from a Licensed, Registered Bank, you have the added protection of a thorough examination of the title and certificate of no liens. Some buyers who obtain financing from private lenders find themselves owing a great deal of money on a property
whose title may not have been thoroughly researched. MEXLend would strongly advise that those seeking this type of financing obtain legal counsel for the purpose of reviewing both the Contract of Sale and the Promissory Note.

Now, it is important to note that we are not including developer financing or seller financing into these categories. These modes of financing are separate and unto themselves.

With the myriad of loans currently available through legitimate sources and additional Banks coming to the fore – there are more safe, secure options for Residential financing in Mexico than ever before. Remember, there are construction to permanent loans, purchase loans and re-finance loans currently available in Mexico at attractive rates. Don’t pay more than you have to and always read the fine print!