Obtaining A Mortgage in Central America

Obtaining a mortgage in Central America can be a tricky and tiresome process.  Ask anyone who’s tried it.  But the industry is maturing, especially in the country of Belize, a relative newcomer to International Banking, who’s industry began in 1996.  Panama is the 800 pound banking gorilla in the region.   But when it comes to securing mortgages throughout the region, more and more North Americans are looking to the tiny nation of Belize, a country long known for diving, fly fishing, and archeological treasures.  Now however, they are also becoming known for bank secrecy, conservative banking policy, and exceptional personal service.

For mortgages, there are two main reasons people are giving Belize a serious look.  The first is that the official language of the country is English.  The second is that they follow a Common Law system familiar to most North Americans.  Both are critically important to the consumer, because they take what has been a complicated and difficult process and made it simple and easy.

The first reason many people are now obtaining mortgages through banks in Belize is that all official documents are in English.  This might seem like a no-brainer on the surface, but one has to remember that in the other countries of Latin America, all legal documents are Spanish.  Even more important, the Spanish version of all documents are the legally binding document.  “Official Translations” are expensive, and in the end, just that, an “official translation.”  The binding document is the document in Spanish.   

The second issue is the more difficult to explain in just a few sentences, because it deals with the difference between Civil and Common law.  Hundreds of thousands of pages have been written on this topic so for any lawyers looking at this article, I apologize in advance for parsing it down to a couple paragraphs.  My examples are anecdotal from my experiences and serve only to highlight some of the major differences between the systems when applying and receiving a mortgage.

The Spanish speaking countries of Latin America use Civil Law systems sometimes called “Roman” or “Napoleonic.”  Beyond being unfamiliar to most North Americans, it is in many ways opposite to how we think the law works.  To state it simply, Civil Law is a top down set of laws and rules created by rulers or administrators that judges must follow.  The spirit of the law is secondary to the written word.   While it’s a good system because it offers all citizens a rule book to follow, it is highly procedural and technical.  It is also a requirement that most documents be signed in person, with witnesses, notaries and copies of documents get sealed and stamped by officials before becoming legally binding.  

Common Law is almost the opposite.  It is a bottom up system of law where laws are created by cases and law is created by a judge’s ruling creating precedents.  The spirit of the law, or the spirit of the contract is not only admissible, it is often a deciding factor in a case.  One major disadvantage of Common Law is that judges can in fact let their personal opinions weigh in on the case and sometimes their decisions create arbitrary or even conflicting sets of laws.  However, when it comes to contracts, real estate paperwork, and mortgages, the advantages of Common Law really shine.  

For instance, paperwork can be handled from afar saving huge expenses in air travel and time.  Faxes and scans can be used for instructions.  Even e-mail notifications are now permitted if all parties agree to it.  A loan can be requested, contracted, and funded remotely saving time, money, and hassle for all parties to the transaction.  

Belize is becoming a leading Central American international jurisdiction with banking at the forefront.  The growing number of international travelers and property buyers is creating an expanding market for their banking services.   Regulated strictly with one of the highest reserve requirements in the world, 24%, Belize is an attractive banking center.  Mortgages to North Americans wanting to own property in the region is just one of the products offered to serve this growing population.  If you haven’t looked at Belize yet, it may be time to do so.

Michael Cobb is a founder and director of Caye International Bank, San Pedro Town, Ambergris Caye, Belize.  Peter Zipper, a 25 year veteran of private banking speaks at hundreds of conferences each year and is an expert on the subject of International Banking.  He can be reached for further information at info@cayebank.bz.