Financing Your Panama Property Purchase

However, many others know that Panama excels at making people from around the world feel as if they have come home

. One reason Panama is a favourite destination for pensioners is that the country has created a unique and comprehensive package that allows pensioners to stay in a dream destination for about the same cost of living--or less than they are paying back home. The same holds true for people who want to purchase land or a home or investment property in Panama.

Because Panama is a crossroads for the world, the banks have become experts at making loans for foreign nationals. They are very comfortable with the idea of offshore buyers; many of these people eventually retire to Panama anyway, and they will often move all their money to the bank that gave them the original real estate loan. It is a good deal for both the bank and the property purchaser.

To get a loan on real estate in Panama as an offshore purchaser, you will need to provide proof of income. This might be a pension statement, several pay slips, or if self-employed, income statements from your business that have been certified by your CPA. They will also require you to establish a bank account at the lending bank, and some of the banks specify an opening deposit amount or a minimum account balance to maintain. Your monthly loan payment will be set up to withdraw automatically from this bank account.

For a buyer of Panama property, you will also need the past three years of personal income tax proofs, and business or corporate income tax proofs may also be requested. At least two bank references are required to demonstrate your good standing, as well as two copies of your passport and drivers license. Several banks also request a copy of the utility bills at your current residence to verify that you actually live there and that your accounts are in good standing.

Several things that will be obtained during the loan process include a credit report and fire insurance for the property to be purchased. The fire insurance is generally required to be made out for the benefit of the lender, rather than the property purchaser. This way the banks interest in the property is protected.

One unusual item is that all loans on Panama properties must be paid by the age of 75, so your loan term may not be for a typical 30 years or 15 years, depending on your age. The rates are variable, and there are generally standard closing fees (appraisal, etc.) to pay to finalise the loan.

As you can see, the requirements for a real estate loan in Panama are not that different from a loan anywhere else--which makes an investment in Panama a great idea!

by: James P Martin

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