For those of you who have read a number of our articles here on Belize FAQs, you may know that we addressed home mortgages in Belize for foreign nationals in our Basics of Real Estate in Belize article.
In the previous article, I noted that traditional home loans in Belize were not readily available to foreign nationals. However, I have recently learned that there are a couple of institutions in the country which do offer some home financing in Belize for foreign buyers.
While there is now some financing available in Belize, these loans are not really comparable to home loans in North America, for example, traditional 30 yr, 20 yr, or 15 yr fixed-rate notes with down payments as low as 5% of the property value and reasonably low interest rates are not available in Belize.
In this article, we take a look at some of the loans that are available here in Belize, as well as other aspects of real estate financing for foreign nationals.
Can I get a bank mortgage for real estate in Belize?
As we indicated in our previously published Basics of Real Estate in Belize article, for foreign nationals, real estate in Belize is still essentially a cash business. And this makes sense if you take into consideration that a Belizean bank would be taking a huge risk in loaning money to a foreign national who could simply pack up and leave the country, leaving the bank with an asset which could take years to sell.
However, I have become aware that things have changed a bit in recent years. In the past, one needed to have been in Belize long enough to have been granted Permanent Residency in order to obtain a mortgage from a Belize-based bank, but now, it appears that at least two financial institutions on the ground here are willing to underwrite mortgages in Belize for foreign nationals.
Let’s take a look at the organizations which offer home mortgages in Belize to non-residents.
Heritage Bank: Home Mortgages in Belize
Heritage Bank has been licensed to operate in Belize since 1999, and it is one of the larger domestic banks in Belize, along with Belize Bank and Atlantic Bank, which are the two domestic largest banks in Belize.
Heritage Bank is broken into two separate parts or divisions, the Heritage Bank domestic bank which serves the local economy and the Heritage International Bank which provides international banking services to non-residents of Belize.
The International Bank offers home mortgages in Belize for foreign nationals. In order to qualify for a mortgage, the bank requires:
- One is a non-resident of Belize, individual or company.
- Have a verifiable source of income to meet loan payments.
- Have a down payment of 40% of the cost of the property.
Along with these basic requirements, Heritage International Bank also lists the following loan processing requirements:
Personal Credit Application Form
- Statement of Affairs (2 pages)
- Budget Analysis
- Letter of Introduction
- Confirmation of Employment (if applicable)
- Latest Tax Return
- Reference Letter from applicant’s bank (in country of residence)
- Notarized copy of passport or Driver’s License
- Credit Bureau Report (from country of residence)
- Current Utility Billing or Banker’s written confirmation
(b) State Purpose, If for:
- Construction – Provide Cost Estimate & Construction Plans
- Business Investment – Provide projected cash flow for at least three years
- Residential – Vendor sale agreement
(c) Security/Collateral:
- Land Title
- Property Tax Records
- Land must be located in Belize
• Cash
- Declaration of Source of Funds
• Standby Letter of Credit
Heritage International Bank Personal Banking
- Confirmed by a USA Bank
As you can see, Heritage Bank requires a good deal of documentation to underwrite a Mortgage in Belize for a non-resident. The bank also requires a hefty down payment of 40% of the value of the property being financed.
While the bank does not advertise its current mortgage interest rates, I have read a number of reports that rates for non-residents of Belize are usually between 10%-18%. And we can see in the section on Caye International Bank below that they do advertise rates in this range, so it is highly likely that Heritage will also fall in the 10-18% range.
Also, while Heritage International Bank does not disclose loan terms, from conversations which I have had with expats in Belize, as well as some things I have read online, I would bet that it is nearly impossible to get a 30-year fixed note. These loans are much more likely to have terms of between 5-15 years, so the principal and interest payments are likely to be much higher than one would find in North America for a loan with a longer term.
Caye International Bank: Home Mortgages in Belize
Unlike Heritage Bank, Caye International Bank does not have a domestic banking business in Belize. According to the Caye International Bank website, Caye Bank started out in 1996 as a Belizean mortgage company, but in 2003, the bank decided to transform itself when it applied for an International Banking License.
The bank became an international bank in September 2003, and since that time, it has served individuals and corporations located outside of Belize. The bank says that it offers a full range of traditional and non-traditional banking services, as well as accounts in multiple currencies.
Like Heritage International Bank described in the previous section, Caye International Bank also offers offers home mortgages in Belize for foreign nationals. In order to qualify for a mortgage, the bank requires that one be an account holder at the bank, and submit the following information along with the Loan Application Form:
Caye International Bank Loan Requirements
- Tax returns showing the first 2 pages;
- W-2’s for at least the last two years; and
- a personal bank statement.
- For corporate loans, we require in addition to the above:
- Financial statements of the company applying for the loan for the last two years, and a personal guarantee.
In the section above, we learned that Heritage International Bank requires a hefty down payment of 40% of the value of the property being financed, however, the required down payment for Caye International Bank is even a bit loftier than this at a full 50% of the property value!
Unlike Heritage Bank above, Caye International Bank does publish its current interest rate, which was, at the time of publication of this article, 11% APR. Caye International also discloses that its loan processing fees are either 2.35% of the loan amount or 2.65% of the loan amount, depending upon whether one is applying from within Belize or from another country.
While Caye International Bank claims that it offers Amortization Terms of between 5-30 years, based on all of the anecdotal evidence I have seen in Belize, I highly doubt that one will find a loan term of longer than 15 years.
Caye International Bank and Heritage International Bank are the two primary banking institutions that I could confirm offer mortgages in Belize for foreign nationals who are not Permanent Residents of Belize.
If readers have information about other banking institutions which offer loans to non-residents, please feel free to contact me, and I will add more institutions to the article if I am able to verify the information.
Is there any owner financing for real estate in Belize?
As I have previously written in our Basics of Real Estate in Belize article, there are, at times, opportunities for buyers to obtain owner financing. Because it has been such a rare occurrence for foreign buyers to obtain mortgages in Belize, owners are at times willing to offer financing to buyers in hopes of generating a faster sale.
While, of course, a seller and buyer can negotiate any type of agreement, most owner financing appears to seek a down payment of 30-50%, for a term of 3-5 years, with a balloon payment of the balance of the loan at the end of the 3-5 year term. Generally, the monthly payments are amortized as if it were a 20 year note.
One risk for the buyer in this arrangement is that if for some reason they can not make the monthly payments, or they are unable to perform on the balloon payment, the seller retains the large down payment as well as the property.
The short-term owner financing agreement might be beneficial to a buyer who is selling a house, or waiting on other funds in their home country, and as I was selling both a home and a business in Hawaii prior to relocating to Belize, I did take an owner financing deal, however, this type of financing really only makes sense for one who has a substantial cash down payment and is certain that they will be able to make the balloon payment.
Finally, one also might find some financing, especially for empty lots, directly from a builder or developer, and one should do very careful due diligence on any of these deals, as the landscape is littered with projects which were started but never completed. Personally, I would not buy into any project unless the infrastructure and promised amenities are complete, and there are occupied homes in the development.
What is the Stamp Tax?
Another feature of the Belize Real Estate market that one needs to think about if financing a property in Belize is that a Stamp Tax/Transfer Fee is payable on all transfers of real estate in Belize. This is money paid by the purchaser to the government of Belize. For a foreign national, the Stamp Tax is 8% of the purchase price of the property, and it is paid at Closing. Belizean nationals also pay the Stamp Tax, but it is at 5% of the purchase price.
It is very unlikely that one could finance the payment of the Stamp Tax, so if taking a bank loan or owner financing, you would need to be prepared to pay 8% of the purchase price of the property, on top of the down payment on the note.
The first $10,000 USD are exempt from the Stamp Tax, so when you are calculating the Stamp Tax due at closing, subtract $10,000 USD from the purchase price. Unfortunately, after Closing, there is still a chance that the Belize Land’s Department will reassess the value of the property, and if they do so, they will ask you to pay additional Stamp Tax.
Unlike in many other jurisdictions, in Belize, even with a 100% cash sale, at Closing, you will not be issued a Title. After you have completed Closing, and the funds have passed to the seller, you will be issued a Land Transfer Document, and while you are able to take possession of the property, it can take from several months to over a year for you to receive your property Title.
For additional information on the Stamp Tax, please see out Basics of Real Estate in Belize article.
Final thoughts on Mortages in Belize
When thinking about the overall real estate market in Belize, the advice of the old timers I have met here seems to be the big takeaway. With an essentially all-cash market for real estate in Belize, it is best to proceed slowly, and if at all possible, come down and rent a place for at least six months or a year before purchasing property.
This advice seems applicable to both those who might pay cash for a property and those who are looking at either owner financing or bank mortgages in Belize. Because the terms of these notes are less favorable to buyers than what might be found in other jurisdictions, it seems really wise to take some time to think through a purchase before being saddled with a high down payment, high interest loan.
If one wanted or needed to leave Belize for any reason and had to sell their property, they could be stuck with hefty loan payments for quite some time while waiting for the property to sell.
Many local folks say that property is extremely easy to buy here for a foreign national, but it can be really difficult to sell, so for like almost everything here in Belize, one is often rewarded for exercising a great deal of patience.
The Stamp Tax of 8% was something that really threw me for a loop when I bought my first property in San Pedro, but by the time that I bought the place in which I live in now here in Corozal, I viewed the Stamp Tax something akin to prepaid property tax.
I think of it in this way primarily because property taxes in Belize are extremely low, almost nonexistent, so it now makes some sense to me that the government collects the tax up front, on transfer, rather than through higher yearly property taxes.
If you are just starting your search for a place in Belize, good luck! Also, many people who are looking at real estate in Belize are also interested in being granted Permanent Residency in Belize, so check out our article on Residency, as it is never too early to be aware of what is required after you make the big move. Finally, for a full list of all of the articles we have posted on moving to Belize or living here, check out our Blog Page.
Finally, if you are considering a move to Belize, you might want to check out our book: Belize FAQs: A detailed guide for those interested in moving to Belize. In the book, there are more than 150 pages of Belize FAQs at your fingertips. And Belize FAQs is available in both paperback and Kindle formats.