Angela Jackson

Despite the global economic environment, foreign lenders continue to offer Canadian residents conventional mortgages for their investment properties in the United States, Mexico, Costa Rica, Panama, Caribbean, and many other Latin America countries. The responsible lending guidelines prove to be a viable option for many Canadian investors, as foreign lenders have a strong commitment to protecting the integrity of this new mortgage climate. The borrower profile must prove to be both credit-worthy and capable of servicing the debt, and in most countries provide full verifiable documentation.

Tranquilo, located 90 minutes from San Jose, Costa Rica. Photo courtesy the Calgary Herald archive.

THE RATE DEBATE

Most “foreign second home mortgages” remain on the balance sheet of the banks that underwrite them and are not sold to a secondary market, as done in Canada and U.S., therefore the costs associated are structured differently.

Additionally, government created agencies which purchase and guarantee mortgages do not exist in foreign lending. Foreign lenders will charge the fees at the front of the loan through “loan origination points,” as opposed to charging the fees through the interest rate, essentially requiring the borrower to pay the full cost of the loan at closing, rather than spreading it over the life of the loan through higher interest payments.

CLOSING COSTS AND FEES:

All foreign lending products will have both closing and upfront costs associated that are country- and lender-specific. Generally, closing costs can be anywhere from four to eight per cent of loan amount, and are fully disclosed prior to formal application through a “Good Faith Estimate.” Typical costs include an application fee and charges related to international credit bureau, loan origination, appraisal, foreigner permits, escrow, title services, notario, closing, and if applicable, trust-related fees.

DUE DILIGENCE:

The mortgage industry in most foreign countries (excluding the U.S.) is not regulated and should be met with “borrowers beware” before submitting any application, monies or personal documentation to an unknown mortgage company while on vacation or over the Internet. It is vitally important to work with a loan officer who has the experience and knowledge to fully execute the loan from application, through title and escrow to closing while ensuring full title has been registered. Together with trusted notario’s, closing, title and escrow agents, Conficasa International (located in Calgary) offers necessary information to provide you with a transparent and trusted financing transaction before you book your “fly and buy” trip.

For more detailed information on any foreign financing product please email questions to Angela at This e-mail address is being protected from spambots. You need JavaScript enabled to view it