Mortgages in Panama: What you Need to Know

Mortgage loans are a financial tool that provides support to those individuals or families who wish to acquire a property or real estate without the need to have the full capital to acquire it.

Mortgages in Panama, mainly those of the residential type, are available for both nationals and foreigners, the most common terms range from 15 years to 30 years.

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General conditions of Mortgages in Panama

• During the mortgage loan application in Panama, banks or mortgage lenders base their analysis on the applicant’s ability to pay according to their income support (whether salaried or self-employed) and the initial payment given, that is, the amount financed vs. the total value of the property.
• Current interest rates have remained between 5.70% to 5.90% since already a couple of years, rates vary depending on the banking institution.
• Banks and the credit committee generally seek job stability, or income stability of at least 2 years.
• A late payment penalty is applicable and may generate up to a 2% interest increase.
• If you want to transfer the mortgage loan to another banking institution, the current bank generally charges a 2% commission on the outstanding balance on the loan.
• It is usual that the bank requires a period of 3 to 5 years where the client cannot pay the mortgage loan in full, or they request a penalty of 2% to 3% (depending on the bank) of the outstanding balance.

The Best Banks That Offer Mortgages in Panama

Among the most recognized in mortgage offers in Panama, are the following:

• Banistmo
• Banco General
• Scotiabank
• Banco La Hipotecaria
• BAC Credomatic
• Banesco
• Caja de Ahorros
• Global Bank

Preferential Interest Rate in Panama

Preferential interest in Panama is a law that supports consumers in acquiring their first home with a mortgage interest rate subsidy on new homes with a value of up to $ 180,000.

This law applies only to new homes and it breaks down as follows:

• For houses under $ 40,000, the state assumes 100% of the interest for the entire period.
• For houses from $ 40,000 to $ 80,000, the state assumes 4% of interest for a period of 10 years.
• For houses from $ 80,000 to $ 120,000, the state assumes 3% of interest also for 10 years.
• In the case of apartments, ranging from $ 80,000 to $ 120,000, the state assumes 3% interest for 10 years.
• For apartments from $ 120,000 to $ 150,000, they assume 2% interest for 5 years.
• Apartments with a value of $ 150,000 to $ 180,000, the state assumes 1.5% of the interest for 5 years.

Requirements to Apply for a Mortgage in Panama

To apply as a salaried employee, the main requirements are: to fill out the bank’s mortgage application form, copy of ID or permanent residence carnet and passport (foreigners), copy of the last social security card, copy of the last payment slip and an employment letter, additionally, it is common for them to request job stability of at least 2 years.

In the case of independent workers (freelance), in addition to their ID, they must demonstrate the support of the income, tax declaration, 2 minimum years of stability in the commercial activity that they carry out and that can be demonstrated with the last 2 income statements and bank movements.

It is worth mentioning that each bank is different, as well as each person situation, therefore, it is very likely that banks and financial institutions in Panama require additional documentation prior to passing the application to the credit committee. Even with the application already inside the credit committee, they may request more documentation in support of what has already been presented.