Nice Live Inn Panama

Archive for June, 2009

The actual process of applying for a mortgage requires that you provide any and all documents proving who you are, your credit status and your total income and assets. Each bank will have a specific list of requirements, but the more you show them, the easier it is for them to get a good idea of who they are dealing with. Communicating with your bank representative is important to fill in any holes, but you will need proof to backup what you say. One bank representative said that she has had people who were denied a mortgage come in crying “But I have this property, and this much in the stock market”, but they didn’t originally submit any proof of these assets and the whole approval process had to begin all over again.

Banks will allow you to send copies of your documents via e-mail or fax to start the approval process, but at some point they will require that the original, signed documents are in their office. The documents can either be presented in person or shipped via DHL or FedEx.

If you change any details from the start of the application process, everything will have to be redone. One common mistake is not being clear about whose name the land and mortgage will be registered to. Only married couples can take out a mortgage together. The obvious benefit of putting two names is that the couple’s joint salary will give them a better chance to be approved for the loan on a property that may be out of one individual’s purchasing capability. If one person suddenly can’t make the trip to Panama to complete the necessary procedures, the mortgage will have to be re-applied for under the spouse’s name only.

Most banks will offer 70 to 80% financing to foreigners (requiring a 20 or 30% down payment) on existing and pre-construction properties.

Leniency is often granted to retirees and others who plan to live in their property. If you make it obvious that you just want to flip the property for a profit, the bank may only offer you 50% financing. If land is purchased with no plans to develop, banks may limit financing to 50% or none at all.

In Panama, interest rates are not fixed by the government and fluctuate depending on many economic factors. Over the past 20 years the interest rate has fallen from 13% to 7% and just recently rose by 0.2%, according to de la Guardia. The rate currently agreed upon by banks is 7.5%, but most banks will cut you a better deal. Because so many factors are considered in the negotiation, the offer that you agree upon with your bank is unlikely to resemble that of a person buying a very similar property. Some banks like to offer a very low first year rate and then adjust if after that year, others start you at one rate and readjust it every six months.

One investor was offered a 4.5% interest rate the first year on his 10-year property loan. The second year, the rate was adjusted to 8%. Surprised by the lofty jump, he went to complain and was given a 7% fixed interest rate if he added one more year to the duration of his mortgage payments. Most banks will work to keep you happy so you keep your money with them, but you should be careful and do your research. The history, stability and overall reputation of a bank say a lot.

Panama is divided into nine provinces (Spanish: provincias) and three provinciallevel indigenous regions (Spanish: comarcas indígenas, often foreshortened to comarcas). There are two further comarcas within provinces that are considered equivalent to a corregimiento (municipality).
The nine provinces are:

The three provincial-level comarcas (indicated by shading on the map above) are:

The two sub-provincial comarcas are: