Financing options for buying a property in Playa del Carmen as a foreigner

Buying property in Playa del Carmen or in the Riviera Maya and anywhere in the Caribbean of México as a foreigner is with their personal cash assets. Financing, while not recommended because of more limitations than the United States or Canada, may be possible. Consider first that the interest rates will be considerable higher, closing fees will be higher, and options of collateral to secure the mortgage more limited.

Almost all foreign buyers pay from cash assets held or liquidated from their primary residence country. However, there are other options such as developer financing, some loans from Mexican banks. Using equity from a home in the United States, Canada, or other country outside México as a source of funds is almost never accepted. 

All payments are made via bank transfer. The Mexican government significantly limits cash payments; and cash limits may change from year to year.

Your best option depends on three factors: your financial qualification, the type of property, and how quickly you want to close the deal. Any financing will require additional time for processing by the financial institution.

Foreign buyers finance with their personal cash assets. 

Today, the most common options for a foreigner who wants to buy in Playa del Carmen are:

• • Cash, bank-bank transfer, is the method of a vast majority of purchases.

• • Developer financing is rare, however the best developers may offer short-to-medium-term financing during promotions.

• • Loans or mortgages with Mexican banks are rare for foreign buyers. 

• • Cross-border loans or loans backed by assets outside of Mexico are extremely rare.

• • Equity loan from a home in the U.S. or Canada (home equity, cash-out refinance, HELOC, etc.)

Collateral of a property or asset outside of México is almost never accepted because of laws differing across international borders.

If a foreign buyer finances a property in Playa del Carmen or in the Caribbean of México, the procedure adds the trust/fideicomiso.

Playa del Carmen and all of the Caribbean of México is within the coastal restricted zone, that is within 50 kilometers of the coastal border of México. “Restricted” simply indicates that purchases for foreigners are structured through a bank trust/fideicomiso. This trust is a purchase through the legal mechanism that allows foreign buyers to acquire land near the coast. It typically has a 50-year term, renewable, and is formalized through a bank and notary. 

That means if you buy with a mortgage, you add a lender to the legal structure of the purchase. The bank managing the bank trust/fideicomiso will likely be a different financial institution. Then as always, the notary is central to receive all the due diligence documentation required by all parties. 

If you’re still not clear on how buying as a foreigner works, you should also read:

How to Buy an Apartment in Playa del Carmen as an American or Canadian – Step by Step

1. Buying with cash remains the best option.

Advantages

• • Simpler and less time to complete

• • Optional terms to negotiate price

• • No dependence on credit approval 

• • The property is yours at closing.

What you should keep in mind

“Cash” means assets available:

• • savings,

• • liquidated investments,

• • sale of another property,

• • or capital released from its country of origin.

This option is usually the only option.

2. Developer financing is rare, but may be your key.

Developer financing is most ofter available in the earliest moths of development, referred to as pre-construction or pre-sale. I prefer the term “pre-delivery” because it designates that the property has not yet been completed. 

A developer may offer plans that are not actually financing after delivery:

• • deposit to secure the promissory purchase agreement,

• • payments during construction allows you to distribute payments during construction, for example 30/40/30 or 30/60/10, a payment much larger near delivery date is rare. 

• • Financing options after delivery, when offered, are more short-term, for example 5 – 7 years. 

If financing after the delivery is offered,

• • the process may more flexible than a bank.

• • it may require less financial paperwork

• • the financing may be the opportunity to purchase now while rearranging your finances.

Always review,

• • implicit rate or surcharge for paying in installments

• • delivery dates of funds

• • penalties, details: contract terms and conditions

• • terms, limits of potential delivery delays.

Weigh the developer options with a trusted, experienced, independent broker. Remember, the agents for a developer represent the best interests of the developer.

A related article:
Pre-construction condominiums in Playa del Carmen: Risks, benefits, and what to consider

3. Mortgages from Mexican banks for foreign buyers are very rare.

Some Mexican banks do lend to foreigners to buy residences in areas like Playa del Carmen, but the options are more limited and rate, fees, and terms are not desirable. The interest rates in México typically are 9 – 12+%. Recent market guides indicate that, for those who qualify, typical financing are roughly between 50% and 70% of the value.

The good,

• • traditional structure

• • predictable payments

• • to conserve cash

The less desirable,

• • additional requirements

• • additional financial documentation

• • longer approval time

• • difficulty to qualify

• • less attractive rates, terms 15 – 20 years, higher closing bank fees, and conditions than in the US or Canada.

Not advisable for the majority of buyers.

4. Equity loan from your property in the your country of residence.

Use accumulated capital in your foreign property to purchase in Playa del Carmen.

Some options:

• • HELOC (Home Equity Line of Credit)

• • Cash-out refinance

• • Mortgage refinancing

• • Sell or liquidate other asset, or a line of credit secured by other capital assets.

This option is most often attractive because,

• • you already know your local financial system,

• • you can obtain funding before entering the purchase in Mexico,

• •  you arrive as a “cash buyer” qualified to purchase,

• • It simplifies the purchase in México.

5. Cross-border loans and other structures

There are also financing advisors who offer “cross-border” financing plans, meaning structures designed for foreign buyers who want to finance a property in Mexico with backing from outside the country or with financing designed for that profile. Recent reports from the Riviera Maya market indicate variable rates and terms depending on risk and structure. My experience suggests that this is the least desirable for most foreign buyers.

It’s for buyers with strong assets, a good financial profile, and patience. Lots of patience.

Call Gary Martin Wendt for an informative and enlightened conversation. 

Costs to consider.

Before you buy, consider where are the costs:

• • bank trust

• • notary fees

• • closing costs

• • legal fees

• • HOA or maintenance

• • electricity, internet and other services

• • rental operation expenses, taxes, etc.

Consider:
How much does it cost to own a condo in Playa del Carmen? HOA fees, utilities, and property taxes

Playa Citizen and broker Gary Martin Wendt guides you toward a safe and secure decision. It’s step by step.

Playa Citizen Real Estate. It’s strategy and then all in the details.

The basics make it sound simple:

• • compare which type of property makes the most sense for your budget,

• • review current developer offers of price, payment plans, financing,

• • review current purchasing plans to match your financial abilities and future plans,

• • guide the transaction for financial and common sense.

The process is not complicated, yet experience, learned knowledge from experience and training, integrity builds trust, 24 years of performance – these are the extra factors to assure safe and secure.

You may consider:
Is Playa del Carmen a Good Place to Invest in Real Estate Right Now?

Choose your guide before making any firm decisions. I suggest call Gary. It’s free. +1 281-770-5258. I am in Playa del Carmen. I will appreciate calls at your convenience, however my preference is 10 – 2, 4 – 8 Playa del Carmen time. And when you live in Playa del Carmen or anywhere in the Caribbean of México, you will never adjust your clock. We are happily in EST – Eastern Standard Time.