Financing a Property in Panama

Are financing sources readily available for foreigners to obtain mortgages for property purchases in Panama?
What documentation is normally required for foreigners (non-Panamanians) to obtain financing on property in Panama?
What are the interest rates for financing property in Panama?
Are there any special financing opportunities in Panama for retirees?
Are there any special financing deals available for first time buyers?
Is there a pre-payment penalty for paying off your mortgage loan before the end of the finance term?
How much do property appraisals cost in Panama?
What about home inspections? How much do they cost?
Is title insurance required for financing property?

Are financing sources readily available for foreigners to obtain mortgages for property purchases in Panama?
Many banks in Panama offer financing to foreigners (non-Panamanians) who wish to purchase property in Panama. Some of these include BAC International Bank, Banco Continental, Banco Cuzcatlan (Panabank), Banco General, Banco Nacional de Panama, Bank Boston, Banistmo, BBVA Bank, Credicorp Bank, HSBC Bank, Multi-credit Bank, Scotia Bank, and others. Please see the details we listed earlier in this chapter.

What documentation is normally required for foreigners (non-Panamanians) to obtain financing on property in Panama?
Please see the list of required documentation listed elsewhere in this chapter. And please note that if you are planning a trip to Panama and wish to apply for a mortgage while there, please contact a Panamanian attorney several weeks prior to your visit to ensure that you bring all the proper required documents.

What are the interest rates for financing property in Panama?
By and large, interest rates in Panama are in line with those offered in the U.S., although interest rates will depend on a variety of factors, including the type of property being purchased (personal residence, commercial property, investment property, etc.); the age of construction (new construction, old construction); the term of the loan (short term, long term, etc.); the applicant’s age and status (retired, etc.); and additional collateral offered to the bank as a guarantee on the loan.

Are there any special financing opportunities in Panama for retirees?
Yes, if you have a Pensionado Visa (proving that you receive a pension of at least $500 per month), and you are of a certain age, then you qualify for special interest rate discounts.

Are there any special financing deals available for first time buyers?
Yes. There is a law called the "preferential interest law", which offers special low interest rates, under the following conditions: the buyer must be a first time buyer; the property being purchased must be newly constructed; the unit must be for residential purposes; the amount being financed must be in the range of $25,000-$62,500 after the down payment; the financing cannot be more than 95% of the appraised value; the property must be titled; and the loan must not exceed a 15-year term.

Is there a pre-payment penalty for paying off your mortgage loan before the end of the finance term?
Check with your mortgage bank. Many banks do charge a pre-payment penalty that may be waived only after the first to 10th year of the loan.

How much do property appraisals cost in Panama?
Generally, property appraisals in Panama are based on the value of the property, and may range between $150 and $1000. For example, an appraisal on a simple 3-bedroom home in Panama City would probably cost approximately $100-$150. But an appraisal for a 200-acre farm with two homes, barn, and other property improvements, and located in the interior of Panama, could cost as much as $1000 or more – because of the complexity of the appraisal, transportation costs to get to the property, etc.

What about home inspections? How much do they cost?
Home inspections range from $50 up, depending on the particular property.

Is title insurance required for financing property?
Title insurance is not required for financing, but fire insurance is always required when buying property with construction improvements (house, condo, commercial building, etc.) as well as life insurance on the debtor.

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