Seven million North Americans travel to Mexico every year, and of that number statistics indicate that as many as 400,000 Americans and Canadians have bought second homes or vacation properties in Mexico, with the majority investing in resort destinations. Financing these dreams can become a reality, now there are several mortgage companies based in the United States that offer financing to qualified buyers who want to purchase properties in Mexico.

Real estate financing is relatively new in Mexico it extends the possibility of owning a home in Mexico to many who could not otherwise afford it. In the past, North American banks were reluctant to provide mortgage financing on Mexican properties due to the foreign investors' inability to obtain title to real estate within 50 kilometers of Mexico's coastline, which is where most foreign investors choose to buy property in Mexico.

The Mexican Government implemented an alternative system whereby Mexican banks acquire the property and place it in trust for the sole use and enjoyment of the foreign property owner, or "beneficiary." The trust, called a "Fideicomiso," assures the foreign buyer of all the rights and privileges of Mexico property ownership, including the right to remodel, lease, mortgage, or sell the property at any time. The trust can be extended for 50 years, renewable in 50 year increments, which allows the buyer to leave the property to an heir. Due to these changes, there are now several American mortgage firms that offer financing for values up to 80% of the property's appraised value. In order to finance Mexican residential properties, there must be a transfer and conveyance to a Mexican bank trust registered by a Notario Publico (Public Notary) which establishes a recorded and renewable 50 year beneficiary interest for the non-Mexican buyer. A simple notation is made on the Mexican trust to protect the lender and provide the lender with sufficient collateral for mortgage financing.

Financing residences in Mexico have advantages when weighed against the additional costs associated with mortgages, i.e., origination fees, discount points, bank appraisals and processing fees. All residential transactions in Mexico require payment of a transfer tax on the declared value of the operation, notary fees, and recording costs. These costs are normal in any Mexican property transfer. Foreign buyers must also pay for the permit from the Ministry of Foreign Affairs, a bank appraisal fee and an annual bank trust fee to administer the Fideicomiso. These expenditures are customary and required, but it should be noted that there is a distinct and protective benefit that purchasers receive in financed investments by foreign buyers.

As our Mexico Financing Expert Don Hearn, Owner of Advanced Mortgage in Mexico states, “Borrowing money for the purchase of real estate in Mexico has never been easier!”