When considering financing options for purchasing property in Punta Cana, Dominican Republic, there are a few options to consider. Each option has its own set of advantages and disadvantages, and it's important to carefully consider which one is best for your individual circumstances.
One option is to refinance or place a home equity line of credit on an existing property in your home country to pay for the DR purchase. This can often be a better option as interest rates tend to be lower and more mortgage products are available. Additionally, it typically takes less time to complete the process, and in some countries, the interest paid may be tax-deductible if the DR property is used as a part-time rental.
Another option is to place a new, US dollar first mortgage on the DR property being purchased. Interest rates for this type of mortgage typically range between 45-9%, with amortizations up to 20 years. A 30-50% downpayment is typically required and the approval process is similar to that in North America, with lenders requiring similar documentation. Self-employed individuals may also be able to qualify.
A third option is to purchase in a project with developer financing. Some project developers offer interim financing until bank financing is finalized (for new builds), while others offer actual long-term mortgage financing. Rates and amortizations vary, so it's important to research which projects offer mortgage financing.
A fourth option is owner financing, where some property owners may be willing to offer financing to buyers. The terms will be set on an individual basis and lawyers will be involved to ensure legal action can be taken if the buyer defaults on payments.
When applying for mortgage financing with a Dominican bank, it's important to have all the necessary documentation. Below is a list of the required documentation:
- Mortgage application properly filled out and signed
- Color photocopy or scan of passport & driver's license
- Latest income tax documents, such as Notice of Assessments (Canada), Tax Return Documents (US & Britain) for the past 2 years
- Employment letters and pay stubs
- Bank statements from the last three to six months
- Copy of TransUnion credit bureau report
- Purchase agreement for the property to be purchased
- Proof of source of downpayment (investments, savings, etc.)
- Appraisal of the property (ordered by lender)
- Documentation and Title of the property
It's important to note that for new properties, it's crucial to have the title and Deslinde process completed in order to obtain mortgage financing. However, in some cases, mortgage financing may be possible before the title process is complete, so it's important to ask for more information on this. The process of obtaining an international mortgage can take up to 3 months, but it's important to keep in mind that DR mortgage lenders/banks can be slow.
Overall, foreign property lending can be a complex process, but with the right guidance and preparation, it's possible to own your own investment or holiday real estate in the Dominican Republic.