Belize has long been known as a place where non-Belizeans didn’t have financing options for real estate purchases. While this was only partially true, it is true that mortgages were no provided to non-Belizeans for properties purchased here. In the following paragraphs you will learn a bit about off-shore banks and domestic banks and if they will provide financing. A final option is seller financing. In this article we will not be discussing ways that you can obtain financing outside of Belize.
This is another long article. However the information provided can be so valuable to somebody who wants to purchase an investment property with financing options.
Off-Shore Options
There is an off-shore bank in Belize called Caye International Bank. This bank provides funds to people who want to purchase in Belize however the individual obtaining the mortgage cannot live in Belize. This is an off-shore bank so the buyer must remain off-shore. With an off-shore account through Caye International you will enjoy advantages that you won’t get with a domestic bank. But, again, you can’t open this type of account while living in Belize to make a purchase in Belize.
Domestic Banks
There are other banks in Belize, domestic banks, that do provide financing options for citizens and residents of Belize as well as non-residents. I know for sure that Heritage Bank has offered a mortgage to a buyer who qualified, regardless of their immigration status here in Belize. A representative of Belize Bank has also informed me that this bank will give mortgages irrespective of immigration status.
Links are provided here for you to obtain information directly from the banks. This is probably the most important step you can take. Don’t take somebody else’s word for whether or not you can get a mortgage from a bank in Belize. Contact them yourselves. Everybody’s circumstances are different and what may allow one individual to quality may not hold true for another person.
Private Lenders
To date there aren’t any, to my knowledge, professional private lenders or mortgage brokers here in Belize. I have seen posts on Facebook where private lenders in the USA will give financing to people wanting to purchase property here in Belize. That will be the subject of a different blog as this one is focusing on lenders here in Belize. A business potential for sure but it’s not a business here yet.
Developer Financing
Another option that comes into play is when you purchase directly from a developer. Developers will offer staged financing options meaning that you put money down to hold the property and then at regular intervals during the development phase. This is especially true when purchasing a completed building from a developer. The funds are due at various stages such as within a certain period of time after signing a contract. Then a percentage is required when a certain portion of the building has been completed and again until the building has been completed. This can take place over a couple of years with the builder with progress reports being provided by a builder representative.
With developer financing the original deposit to hold the property is often refundable until the build process starts. Then it is non-refundable. And paperwork is provided to protect both parties, which can be challenged in court. Three developers that come to mind are The Belize Collection Reef, Coconut Point and Vanilla Bean Inn. Each of these have different ownership models so it’s important to review the paperwork thoroughly, with your lawyer.
Seller Financing
The final option you have for financing a property purchase here in Belize is through seller financing. This is when the seller acts like the bank for you. There are terms to negotiate during this financed offer to purchase process that are the same as you would at the bank. Length of time, balloon payments, interest rates, penalties – these are some of the terms you can negotiate with a seller who will financed a buyer. There is no such thing as a pre-approval or credit checks here.
So if you obtain a pre-approval from your home bank it’s irrelevant here as banks don’t look at those. Although, a seller may consider that document as part of their consideration in financing you or not. Also there are no credit checks here so the same applies as if you obtain a pre-approval. A seller may take it under advisement for providing financing to you. Keep in mind that the seller or a bank will be unable to verify this information which is why it’s not given a lot of weight when deciding to provide financing for your purchase.
Seller Financing Terms and Protections
If a seller decides to provide financing to you the way the sales agreement is prepared will protect both the buyer and seller from one or the other acting in bad behaviour.
First there generally is a fairly large down payment, often times 50%. This large deposit shows intent on behalf of the buyer – they likely won’t walk away from this deposit.
The next part of protecting both parties is the legal document itself. A deed of mortgage is prepared and this effectively puts a lien against the property as it is a registered document at the Lands Department. The deed of mortgage shows the property in the buyer’s name but because it’s a mortgage the new owner can’t turn around and sell it without paying the seller in full for the purchase price.
Buyer and Seller Protection out
A discharge of mortgage has to be prepared and registered with the Lands Department and this document is only prepared when the loan is paid off with a signed document from the seller. So it is with these 2 documents that both buyer and seller are protected from acts of bad faith from either party.
Because there are two types of documents that are prepared there are two legal fees that are paid by the buyer. The second fee comes when the deed of mortgage is prepared to remove the lien and turn into a proper titled document in behalf of the buyer.
Monthly payments (if that’s what the buyer and the seller agreed upon) are paid directly by the buyer to the seller to an account designated by the seller. If the seller wants the funds paid in any currency other than US funds the seller is responsible for the exchange rates.
Sales Default Terms
Your sale agreement with the seller outlines what would happen should the buyer default on the payments. There are penalties for late payments and the potential to lose the property is real for a complete default on payments. Unlike North America, the property would not be sold for market value with the balance of the funds, after paying the seller, being given to the buyer. No, it is a complete default with the property reverting to the original seller and the buyer loses everything. This is also another way we know the buyer is serious – the stakes are just too high for somebody who is toying with a seller. The buyer could try to fight this, but it does require court at Belize supreme court with a Belize lawyer.
Obviously, buyers don’t go into a financed transaction with the goal of defaulting. However we all know that we can and do fall on hard times. This means that your best friend with be your ability to communicate with your seller. Be open and honest as soon as you know there may be an issue. Don’t wait until the last minute because this inspires a lack of confidence in you. The two of you are in a partnership on this transaction so communicate, communicate, communicate.
Get Representation
Sometimes buying property in a foreign country can be daunting. Having information such as that shared here can go a long way to assist you to make a good, well-informed decision. So if you want to learn more about financing here or any other real estate related topics, please feel free to reach out.
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