FAQ's - Buying A Home In Lake Chapala: Part 1
Updated: Sep 4, 2020
As a real estate agent I find I get asked the same questions time and time again. So here is a blog which answers the most frequently asked questions and walks you through the buying process for purchasing residential property in the Lake Chapala area.
Q) Can I get a Deed to my new, Mexican home?
A) Most homes at Lakeside are sold with a Deed. A Trust (Fideicomiso) could be set up instead though a bank, depending on the buyer’s needs and circumstances. The Notario will recommend the best course of action for you prior to closing. There are areas in Mexico where foreign ownership is only allowed by the Mexican government via Trust. These lie within 100 kilometers, or for you Americans 60 miles, of any Mexican border or 50 kilometers, 30 miles, of any Mexican coastline.
Q) Can I will my property to my children or other family members?
A) Prior to closing, you can advise the Notario the name(s) of your Beneficiary. A Mexican will is required if you own more than one property in Mexico, and it is optional when you own one property. Upon the owner(s) death, your Beneficiary will be responsible for payment of the appropriate Mexican tax to have the property transferred to their name.
Q) I am just visiting as a tourist. Can I still purchase a home?
A) As of right now you can even purchase Lakeside property with a visitor's (tourist) visa. We do advise our clients, however, that in the near future purchases may be restricted to buying with a Temporary or Permanente Visa only. A Permanente Visa is required to minimize capital gains tax when you sell your property.
Q) I don't have enough money to purchase my dream home. Can I get a mortgage?
A) Most sales are 'cash only'. The local Mexican banks generally do not offer financing to expats. If you require additional funds, an option is to find a private investor who will contribute up to 50% of the purchase price. Their name will be on the Deed alongside your name (the buyer) for the percentage of the property they contribute. The loan term is up to 5 years at a rate of 10 - 12% interest, payable monthly. At the end of the term, the investor’s share can be bought back, or a new term negotiated.
Q) How do I proceed after I sign the Contract to Purchase a home?
A) Always make an “Offer To Purchase” conditional upon a satisfactory home inspection. Negotiate the best price, and once your price is accepted, hire the inspector who will prepare a thorough report for you, listing all deficiencies. Once you sign off/accept the report, you must wire 10% of the sale price for the house to be placed “under contract”. This initial payment will be held intact until closing date. After accepting the inspection report, your real estate agency and the Notario work hard for you to ensure that all documentation required in Mexico for the closing of the property is in order. Three days prior to closing, the 90% balance payment must be in the trust account, where the funds will be appropriately distributed the day of closing. If the purchase is made in U.S. dollars, the money is held in a trust account in the United States. If the purchase is made in Pesos, the funds are received at a local Mexican bank. Checks are not accepted as they are not traceable by government agencies.
Find the answers to the rest of the FAQ's in the next blog: