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Article
| You Can Live Well…and Pay 4% Below Regular Mortgage Rates |
The law, set to expire at the end of this year, applies to new construction with a sales price of up to $62,500,
on which buyers can obtain mortgage interest rates of just 2% to 3% (regular mortgage interest rates are
currently 6.5% to 7.25%).
Various organizations—including the Panama Chamber of Construction (CAPAC) and Panama’s Association
of Real Estate Brokers (ACOBIR)—are lobbying for the law to be extended and for the threshold to be raised
to $82,000.
Sources say the law is likely to be extended. As for raising the threshold, that's another story. The
government has long refused to do this, saying that the law, as is, continues to help low-income families.
Critics say that the $62,500 threshold is no longer reasonable, considering that price increases for certain
key materials (like cement) have raised property prices. Even property built for the local market, as opposed
to the many "luxury" developments that target expats and affluent Panamanians, is more expensive.
Housing Minister Balbina Herrera is behind the proposal and has promised to raise the threshold, according
to Panama's La Prensa. We'll let you know if she succeeds.
Property on the market today
You may think that it's impossible to find property in Panama for under $82,000. Not true. What is true is that
the average expat is looking for a home or condo that meets high standards or conforms to American and
European tastes. These types of properties have become much more expensive in the past year. But it is still
easy to find homes priced from $50,000 in rural areas. Even in Panama City, there are options...on the local
market.
Bottom line: if you have a small budget and are willing to live like a local, this law could help you halve your
monthly mortgage payments.
Keep in mind, there are trade-offs. When we say "live like a local" we don't mean just living outside a gated
community or going without high-end fixtures. Living like a local could entail much smaller living quarters than
you're used to…or buying in a middle- to lower-middle class neighborhood in the city…or living in a middle- to
upper-middle-class suburb outside of the city. If you're willing to do this, there are residences available in this
price range…
Remember: the preferential interest law is not limited to Panamanian citizens. Anyone meeting the price
requirement can apply. Among other requirements, the home must be new and it must be your primary
residence. Most banks limit the mortgage term to 15 years. That said, don’t be afraid to ask your loan officer
for an exception…every once in a while, the banks are willing to make exceptions on a case-by-case basis.
on which buyers can obtain mortgage interest rates of just 2% to 3% (regular mortgage interest rates are
currently 6.5% to 7.25%).
Various organizations—including the Panama Chamber of Construction (CAPAC) and Panama’s Association
of Real Estate Brokers (ACOBIR)—are lobbying for the law to be extended and for the threshold to be raised
to $82,000.
Sources say the law is likely to be extended. As for raising the threshold, that's another story. The
government has long refused to do this, saying that the law, as is, continues to help low-income families.
Critics say that the $62,500 threshold is no longer reasonable, considering that price increases for certain
key materials (like cement) have raised property prices. Even property built for the local market, as opposed
to the many "luxury" developments that target expats and affluent Panamanians, is more expensive.
Housing Minister Balbina Herrera is behind the proposal and has promised to raise the threshold, according
to Panama's La Prensa. We'll let you know if she succeeds.
Property on the market today
You may think that it's impossible to find property in Panama for under $82,000. Not true. What is true is that
the average expat is looking for a home or condo that meets high standards or conforms to American and
European tastes. These types of properties have become much more expensive in the past year. But it is still
easy to find homes priced from $50,000 in rural areas. Even in Panama City, there are options...on the local
market.
Bottom line: if you have a small budget and are willing to live like a local, this law could help you halve your
monthly mortgage payments.
Keep in mind, there are trade-offs. When we say "live like a local" we don't mean just living outside a gated
community or going without high-end fixtures. Living like a local could entail much smaller living quarters than
you're used to…or buying in a middle- to lower-middle class neighborhood in the city…or living in a middle- to
upper-middle-class suburb outside of the city. If you're willing to do this, there are residences available in this
price range…
Remember: the preferential interest law is not limited to Panamanian citizens. Anyone meeting the price
requirement can apply. Among other requirements, the home must be new and it must be your primary
residence. Most banks limit the mortgage term to 15 years. That said, don’t be afraid to ask your loan officer
for an exception…every once in a while, the banks are willing to make exceptions on a case-by-case basis.