Borrowing to buy overseas … this is what you have to know

Nowhere in the world has it ever been as easy to borrow money to buy real estate as it has been in the United States of America over the past decade. You could borrow more than the cost of the property you were buying, even, with a fixed rate of interest and a nice, long repayment term.

During this time, as a result, the easiest way for an American to source capital to purchase real estate anywhere in the world has been to borrow it at home. Pull equity out of his U.S. property. Or simply find some U.S.-based outfit willing to lend him money for property purchase elsewhere.

One consequence of this easy credit market in the States has been that it hasn’t mattered that financing is nowhere else in the world as easy to come by…especially if you’re a foreign buyer.

That is to say, over the past decade, as property markets worldwide have heated up and, in some cases, bubbled over, Americans have been able to participate by bringing their cash with them.

Those days are over. Good luck these days finding a lender in the States to write you a loan to go buy a beachfront lot in Nicaragua or a condo in Panama City.

Again, the markets we deal in operate on cash, with very limited exceptions. If you can’t bring it with you from back home, you do have options…but not many and not always good ones.

In Europe, you can borrow locally as a foreign buyer. Lending criteria have always been more conservative than in the States…and continue to be. And the product line is more limited.

Adjustable-rate mortgages, not fixed, are the norm.

Best case, the lender might give you 20 or 25 years to repay. No such thing, really, in Euro-land as a 30-year loan.

And you’re going to be required to get local life insurance for the entire term of the mortgage. In the U.S., you can get life insurance until age 100. In most of the rest of the world, you probably won’t find anyone willing to write you a policy past age 75. Meaning that, if you’re 65 when you apply for a mortgage, you’re looking at a repayment term of 10 years.

Straight up, you aren’t going to be able to borrow to buy real estate in Asia as a foreigner. On the other hand, in many markets in this part of the world, you aren’t going to be able to own real estate as a foreigner anyway…so it’s not really an issue.

Which brings us back to the Americas. The property bubbles of the past decade in Costa Rica, Nicaragua, Panama City, and elsewhere have been fueled largely by Americans either speculating or buying retirement and second homes with money borrowed in the States.

Now that that source of funding has evaporated, what are your options in Central and South America?

Developer financing, which is increasingly a possibility, as developers in this part of the world are hungrier and hungrier, month by month, to stimulate sales. I know developers in Costa Rica, Nicaragua, Honduras, Belize, and Uruguay, for example, who are more open to carrying back part of your purchase price than ever before in the 25 years I’ve been covering this beat.

In these markets today, make an offer…and ask if the developer is willing to discuss terms. The answer should be yes.

Your other option is to borrow locally…which is not possible across Latin America, certainly, but in particular markets, yes.

You aren’t going to borrow locally in Nicaragua. Or Honduras. Or Argentina.

Caye Bank in Belize might lend to you…to buy not only in Belize, but elsewhere, as well.

And, in Panama, yes, it’s possible to borrow locally as a foreigner, as we discussed with attendees at our Live & Invest in Panama Conference last week.

However, again, understand, the lending industry in Panama does not operate in the same way as the lending industry in the States. You can’t walk into any bank and ask for a loan application.

Two banks operating in Panama that will lend to foreigners interested in purchasing real estate in this country are HSBC and Scotiabank. Again, the rates are variable, not fixed. The terms are, typically, 5 to 15, maybe 20 years. And, again, you’ll be required to purchase life insurance for the entire term of the loan (which can be a very restrictive requirement, depending on your age at the time you make the application).

Kathleen Peddicord


The Safest Haven In The Americas Is Also…

Beautiful, with dramatic ocean and mountain views, warm, welcoming, and friendly. This is the best of small-time life, Old World charms, and big-city comforts and diversions…plus beach and marina access.

Financing an option.

And, yes, very, very affordable.



“On the subject of Honduras,” writes friend Rod Nugent in response to my comments in yesterday’s Mailbag, “I can speak from some experience.

“In my search for an expat retirement location, I traveled throughout the Caribbean Islands, Honduras, and Mexico before settling on Panama. I spent several weeks in Honduras and agree that the only interesting areas are the Bay Islands, including Roatan.

“Although there are some very nice beaches on Roatan, the real estate market is certainly at a mature state, with large increases in value now in the past.

“Furthermore, although it is true that there are native English-speakers on Roatan (known as Caracols), remnants of the old British Honduras culture, these folks are dying off rapidly and being replaced by mainland Spanish speakers.

“The population of Roatan is about 30,000, and the commercial possibilities are limited. Good restaurants can be counted on one hand, and cultural events are almost non-existent.

“Also, there are some restrictions on foreign land ownership. The main town, Coxen Hole, is well-named.

“During the cruise ship season, several thousand day-trippers descend on all possible island venues.

“The upside: Short flights from the U.S. mainland.

“The downside: Deep and hopeless poverty.

“Local residents have little opportunity for advancement. They earn very low wages in a place with a relatively high cost of living. And, as the English-speakers die off, they are immediately replaced by the desperately poor Spanish-speaking mainlanders (and there are 7 million of them), who see Roatan as a relatively prosperous opportunity.

“I would contrast this situation with Panama, where the wages are low but the cost of living is also low and it is very possible to live a relatively comfortable life and raise a family, own your own house, have good health care for your children, etc., on local wages.

“Bottom line: I would consider a week vacation on Roatan, but, as a retirement destination, I would give it a pass.”


“We will be visiting Panama Aug. 7 through 30. Our plan during the first week is to gather information on the pensionado visa, opening a bank account, etc.

“We’re wondering if you could give us any idea how to go through the process. We know that we want to look at apartment rentals or subleases long term, before committing to the purchase of real estate. Reason is that we are sitting presently on two waterfront properties in Florida, which we can’t sell under present market conditions.

“If we could afford city life we would rather rent on the outskirts.

“On Aug. 14, we will likely rent a car for two weeks and travel the country.

“I have no idea if US$1,200 Social Security monthly will be sufficient to live on in Panama, but I also know that we won’t survive financially in the U.S. Any thoughts on your part I will greatly appreciate.”

— Michael S., United States

The woman you want to get in touch with is named Rainelda Mata-Kelly. Rainelda has been our personal attorney in Panama for more than 10 years, and we’ve recommended her to hundreds of readers and friends over the past decade. She’s the most competent, experienced, and reliable legal counsel you’ll find in this country and the one to help you with your residency work, your visa choice, opening a bank account, purchasing real estate (when you’re ready), and anything else you might want to do Panama-wide.

Your options for obtaining foreign residency in Panama are many. The pensionado visa is probably your best choice, but Rainelda can help you to make that determination.

Right, you want to rent first, to give yourselves a chance to try Panama (and, just as important, a particular region of this country) on for size before committing to a real estate purchase.

Yes, you can live in Panama on US$1,200 a month…though probably not (at least not comfortably) in Panama City. In the interior of the country (our top recommendation right now is the Azuero Peninsula, which offers many options), however, US$1,200 a month could go a long way.

Our editor Rebecca Tyre lives in Las Tablas, on the east coast of Azuero, where she spends US$200 a month to rent a little house on the beach. Other costs in this part of the country are similarly appealing. Our new Editorial Assistant is working now on detailed cost-of-living budgets for both Panama City and Panama’s interior. Details soon.


“You just sent out a list of all the countries for retirement. I think France was on the list. But I can’t find it. Would you please send me the e-mail it was contained in?”

— Patti C., United States

Here you go, dear reader, the link to the e-mail dispatch you’re asking about: Choose From Among These Top 18 Overseas Havens.”

Included on the list, for quick reference, are:

  • Argentina…from cosmopolitan Buenos Aires to Mendoza wine country…
  • Belize…one of the easiest places in the world to get foreign residency…plus some of the best diving on earth…
  • China…yes, China…perhaps the cheapest place on earth to think about becoming a foreign retiree…
  • Croatia…the Mediterranean like it used to be…
  • The Dominican Republic…our editor Rebecca Tyre has just returned from a scouting trip and couldn’t be more bullish on this beautiful Caribbean island fringed with miles of white sand that she says has got to be the most expat-friendly place on earth…
  • Ecuador..most affordable retirement haven in the Americas…
  • France…world’s best health care…world’s most beautiful city…and more affordable than you might think, especially in the secret “other” South of France…
  • India…cheap, cheap, cheap…and, in some parts, beautiful…
  • Ireland…perhaps the world’s most welcoming nation, right now in crisis…meaning this country makes more sense from a cost of living point of view than it has in a decade…
  • Italy…your dream of la dolce vita could be more affordable than you think…
  • Malaysia…My Second Home program welcomes foreign retirees…
  • Mexico…most accessible choice for Americans…in some cases, only a drive away…
  • Nicaragua…long and glorious Pacific coastline…plus colonial Granada, the most romantic city in the Americas…
  • Panama…the world’s #1 retirement, offshore, and business haven…with still-emerging pockets of opportunity for real estate investment…
  • Philippines…working to make itself the most foreign retiree-friendly country in Asia…
  • Thailand…super-affordable and exotic…
  • Uruguay…safe and stable with a low, low cost of living…


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