Belize is an attractive destination for foreigners looking to acquire a vacation home or investment property. For one, there are no restrictions on foreigners owning property in Belize as they have the same property rights as Belizean citizens.
There are also significant tax benefits to owning real estate in Belize. For instance, there are no capital gains taxes. Any appreciation realized upon a sale of a property is not subject to tax.
We know Belize property ownership is accessible to foreigners, but what about financing?
For financing real estate acquisitions in Belize, there are three options available:
- Local Financing.
- Offshore Financing.
- Owners Financing.
Local Financing. Local financing is the least appealing of the three options because it’s typically not available to non-residents. Local borrowing is only permitted in Belize dollars, and because many Belize real estate transactions involve Americans and are conducted in U.S. dollars, local financing is not applicable in many cases. Even if you qualify for a domestic real estate loan, the terms are burdensome. The terms are short with high-interest rates and down payment requirements.
Local loans carry fixed terms of only 12 months. If you seek to continue financing, you will have to obtain a new loan at the then market rates. Local interest rates are usually in the range of 10% to 18% with most lenders only lending at 50% LTV – meaning the buyer will need to come up with 50% down.
Offshore Financing. Offshore banks offer mortgage loans to non-residents on more favorable terms than loans available through local financing. Terms range from 5 to 30 years with more reasonable interest rates. Down payment requirements are still high as most offshore banks lend at a maximum of 60% LTV.
One of the big advantages of offshore lending over domestic lending is that you can choose the currency of your loan. This facilitates transactions conducted in U.S. dollars.
Owner Financing. By far the most convenient and popular form of real estate financing in Belize is owner financing (aka seller-carried) where the seller offers owner financing to the buyer of the property offered for sale. Of course, the terms vary with the seller but typical terms of 5 to 10 years with rates of 5% to 10% with a down payment of 30% to 40%.
The seller-finance loan agreement is filed along with transfer and deed forms with the lands department in Belize to protect both buyers and sellers. The title transfer is complete once the final payment has been made.
Warning: Some sites promote seller financing but the deals are long gone by the time you inquire.
If you want to know what’s available today, send Jason Turley an email at firstname.lastname@example.org.