# borrowing money to build



## baja beauty (Jun 26, 2009)

Hi There,
Currently building in Cabo San Lucas. Halfway through build using own funds but now may need to borrow to complete. Does anyone know if this is an easy process. We are not from the USA as are most expats, but from New Zealand. Do the banks view it the same ie Loan to Value ratio and calculating equity


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## soldadoswife (Jun 26, 2009)

hi...I'm wondering the same thing. we are building with our won funds too. we are building near Tecate.or Ensenada. I'm new and just moving to Mx. My husband is going to cabo this weak to check it out. There is not any work in our area. His bro. lives in Cabo and guranteed him work. would love to have some friends. Add me as a friend if you would like.


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## RVGRINGO (May 16, 2007)

Mortgages are difficult and very expensive in Mexico. It is only easy to get one if you really don't need it. That's why you see construction projects that overlap several generations as the family home grows brick by brick over many years.


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## BajaGringo (May 11, 2009)

RV is right - construction loans are very hard to come by in Mexico without a lot of local established credit and/or collateral. If your budget is tight I would suggest looking to areas where the land and cost of labor is cheaper. Size down your dream villa to a more reasonable casita, be your own general contractor, work alongside your workers and allow your budget to determine the construction progress. You can build a small, simple home in Mexico for very little money if you look outside the more expensive areas, are creative and willing to think outside of the box. 

You can add on the maids chambers, upgrade to granite counter tops and marble floors later on in the future...


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## baja beauty (Jun 26, 2009)

*cabo build*

Hi
, Good luck with your move. I am not sure where Ensenada is or how far from Cabo. We are hoping to have the home complete by the end of the year and will live between Australia and Mexico. 

Will keep in touch 



soldadoswife said:


> hi...I'm wondering the same thing. we are building with our won funds too. we are building near Tecate.or Ensenada. I'm new and just moving to Mx. My husband is going to cabo this weak to check it out. There is not any work in our area. His bro. lives in Cabo and guranteed him work. would love to have some friends. Add me as a friend if you would like.


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## baja beauty (Jun 26, 2009)

*building in Cabo*

Hi BG

Thanks for your reply. We are already halfway through building so would have over 65% equity in the finished project[, just need to borrow 35%. We have bought with a fiedicimoso trust, so assume that banks will lend under this title. 

Is one bank better than the other in Mexico? 

Does anyone have an idea what interest rates are for lending at the moment? 

Thanks

QUOTE=BajaGringo;155440]RV is right - construction loans are very hard to come by in Mexico without a lot of local established credit and/or collateral. If your budget is tight I would suggest looking to areas where the land and cost of labor is cheaper. Size down your dream villa to a more reasonable casita, be your own general contractor, work alongside your workers and allow your budget to determine the construction progress. You can build a small, simple home in Mexico for very little money if you look outside the more expensive areas, are creative and willing to think outside of the box. 

You can add on the maids chambers, upgrade to granite counter tops and marble floors later on in the future...

[/QUOTE]


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## RVGRINGO (May 16, 2007)

Especially in this financially troubled era, it is the bank itself which can respond to your questions regarding financing. The bank which holds your property in trust should be your first contact.


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## Guest (Aug 18, 2010)

Though this thread is a bit old, I just talked with a friend yesterday, and Santander's best rate right now is 10.53% and they will loan up to 85%. Not sure on length of loans available, but will ask him more questions and post here.


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## joaquinx (Jul 3, 2010)

GringoCArlos said:


> Though this thread is a bit old, I just talked with a friend yesterday, and Santander's best rate right now is 10.53% and they will loan up to 85%. Not sure on length of loans available, but will ask him more questions and post here.


I thought that most banks required an FM-2 rather than an FM-3 for any loan. Anyone know if this is true?


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## achilipepper2010 (Feb 21, 2010)

santander is a good choice, open an account, then a credit card 4 months later i believe then they will approve you on a loan for a house after that.
butter up the director, give him a gift and always be polite. they have a lot more pull than you think.
if you have income from the USA or otherwise, the verification process is simple to get approved.
I am looking into this later this week, and yes the interest rates are high. i believe 10 for every 1000 pesos borrowed.


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## Guest (Sep 22, 2010)

Sorry for the delay, but I finally spoke with my banker about mortgages at ScotiaBank today.

ScotiaBank will give mortgages to foreigners who hold an FM-2 visa (but not to FM-3 holders). 

Scotia will loan up to 80% on a regular mortgage. (Santander will loan up to 85%) Scotia's minimum mortgage loan is for MX$300,000 and is for 20 years. You can prepay the mortgage at any time without penalty.

If you already own your land and want to build, they will loan up to 70% of the finished value of the project following construction. The loan is a loan, and done only once. (in other words, they don't give you a bridge loan during construction, and then do a regular mortgage upon completion).

The mortgages they give also include insurance on the house, and life insurance, and these costs are included in the monthly payment (sorry, can't remember if the property taxes are included, but in MX, property taxes are insignificant in comparison - in my area (Queretaro state) they are about US$70 a year).

Scotia's current best mortgage rate is 11% which includes the insurance costs, and is for a 20 year mortgage. He told me that their rates are a little bit better than Santander's with the extra costs right now. His rule of thumb is that you will pay 9 pesos per month for every 1000 borrowed. (when I punched in the numbers on Hugh's Mortgage Calculator, the 9 peso rate actually shows up as a 9% rate, so maybe the insurance costs make the effective rate 11% ??) 

What's Missing Loan Calculator

Hope this is helpful to someone.


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