FAQ's - Buying A Home In Lake Chapala: Part 1
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) Virtually all homes at Lakeside are sold with a Deed, although, a Bank 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 Bank Trust. These lie within 100 kilometers (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(s). A Mexican will is required if you own more than one property in Mexico, and it is optional (but highly recommended) 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 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 Permanent Visa only. A Permanent 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' so be prepared. The local Mexican banks (as of 2020) offer financing to expats but the mortgage rate is very high. Another option is to find a private lender. In either case, they can only 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 1-5 years at a rate of 10 - 12% interest rate (private lender), 14-20% interest (bank), payable monthly. At the end of the term, the investor’s share can be bought back, or a new term negotiated. Usually, the first year is solely interest.
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 an 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” within 3-5 days. 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 agencies trust account, where the funds will be appropriately distributed the day of closing after all the documents are signed. If the purchase is made in U.S. dollars, the money is held in USD in the agencies Mexican bank account. If the purchase is made in Pesos, the funds are received at a local Mexican bank and converted. Excellent exchange rates can often be had by larger, established Real Estate Companies. Money can only be sent by wire (to protect against fraud) and cheques (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:
Michaela & Ricardo are your FULL SERVICE Real Estate Agents. Along with our Retirement Seminars, our over 20 years of combined experience Lakeside, and our network of area Professionals, we help guide you to from beginning to forever in your Retirement Journey to Lake Chapala, Mexico.