Panama’s Preferential Interest Rate Law

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Panama Preferential Interest Rates for Home Mortgages

Panama has a unique law helping first time buyers of new homes with a subsidy reducing the mortgage interest rate.

Law No. 50 (October 27, 1999), which was partially amended by Law No. 28 (June 20, 1995) and Cabinet Decree No. 44 (1990) along with a March, 2012 law which increased the qualifying homes maximum values to $120,000 where homes will receive a subsidy of two percentage (2%) points off the market rate.

In order to qualify for this “preferential interest law” subsidy of special low interest rates, these are the conditions:

(1) Must be a first time buyer;

(2) The property being bought must be new construction;

(3) The property must be for residential purposes;

(4) The amount financed must be in the range of US$35,000 to US$120,000 after the down payment;

(5) Financing can’t be more than 95% of the appraised value;

(6) Must be titled property; and

(7) The loan can’t exceed a 15 year term.

Requirements for loan approval:

• Two (2) years minimum of continuous employment history (private sector) or five (5) years (government sector);

• Good credit references;

• Life insurance eligibility.

Required documents from foreigners who wish to apply for a mortgage:

Individuals:

• Complete and signed application;

• Copy of your passport, include the pages showing the immigration stamps (entry and exit);

• Copy of a 2nd ID (driver’s license, social security card, etc.);

• Last 2 income tax returns;

• 2 bank reference letters from applicant’s country of origin;

• If applicant has a Panama bank account, a reference letter from the local bank;

• Credit reference from applicant’s country of origin.

Corporation:

If the applicant is a corporation and there are foreign shareholders or Board of Directors members, or if the beneficiary is a foreigner, each person must provide the above-mentioned documents.  Additionally, the corporation must provide commercial documentation.

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