If you’re considering the purchase of a residence in Cabo, you’ve likely found some properties where you could envision your future life south of the border. You’ve likely also discovered that that buying in Los Cabos is, more often than not, an all-cash transaction. This article summarizes potential home financing alternatives for homes and condos in Cabo.
Seller financing
Seller financing is a scenario where the current owner of a property offers their own terms directly to the buyer. Typically, seller financing is in the form of a short-term bridge loan to help the buyer close and is meant to be paid off within a few years.
While the details may vary greatly by individual property and scenario, a recent example a Mint Cabo seller offered consisted of:
- Term: 3 years
- Initial down payment: 50% of the purchase price
- Interest rate: 7%
- Amortization period: 20 years
- Payments: Equal monthly installments
- Final Payment: Balloon payment of the balance at the end of term
Developer financing
Primarily on pre-construction communities, developers can choose to offer financing terms which resemble a conventional mortgage. The down payment requirements are typically lower than those of seller financing and the term is typically longer.
While the details may vary greatly by development, a recent example of a pre-construction property consisted of:
- Term: 10 years
- Initial down payment: 30% of the purchase price
- Interest rate: 6%
- Amortization period: 30 years
- Payments: Equal monthly installments
- Final Payment: Balloon payment of the balance at the end of term
Global Mortgage (MoXi)
Until very recently, there has not been a traditional style financing available to purchase a home in Cabo. Global Mortgage (MoXi) offers 25-year, fully amortized loans for residential purchase and refinancing. You can impound your ongoing expenses (i.e. taxes, fideicomiso, HOA, etc.) into your loan and as your interest is reported in the US, there may even be potential tax deductions available. Note that the process is quite intensive, so plan on about 90 days to fund and some upfront origination fees to close as compared to a US mortgage loan.
Can you get a loan from a Mexican bank?
Most Mexican banks only lend to nationals. And while some may offer to permanent residents, the interest rate will be much higher than you might expect (up to 14%).
Tap home equity back home?
For Americans and Canadians, the most economical money source is often refinancing existing properties and pulling cash out or using a Home Equity Line of Credit (HELOC) to draw from the equity.
This Cabo real estate buyers guide provides perspectives around financing the purchase of a home or condo in Cabo. Questions? Contact us – we’d love to chat.