Frequently Asked Questions (FAQ)2020-10-13T09:18:51-04:00

Frequently Asked Questions

What is a Fideicomiso / Bank Trusts?2020-03-30T12:46:45-04:00

Foreigners can not directly own real estate within Mexico’s ‘restricted zone’ as addressed in Article 27 of the Mexican Constitution. The restricted zone encompasses all land within 100 kilometers of any Mexican border, and within 50 kilometers of any Mexican coastline. To permit foreign investment in these areas, the Mexican government introduced the “Fideicomiso,” (FEE-DAY-E-CO-ME-SO), which is, roughly translated, BANK TRUSTS. A Mexican bank is designated as the trustee holds title to the property and is the owner of the record. The Bank Trusts enable foreigners to enjoy unrestricted use of land on or near the coastlines in order to realize improvements, expansions, and to profit from the sale of the property without restrictions.

What is an apostille?2020-03-30T13:01:13-04:00

The purpose of an apostille is to authenticate the notarization and or certification of documents to be used in a foreign country. An “authentication” certifies the signature and the position of the official who has executed, issued or certified a copy of the document.

What is the Public Registry?2020-03-30T13:00:33-04:00

The Public Registry (Registro Publico) is a government office where documents are filed regarding actual ownership of land titles to see if any liens exist. In Mexico, deeds are public instruments and can be researched at these offices which are open to the public. The majority of cities and towns of Mexico have a Public Registry of Property. In a real estate transaction, the notario publico conducts a search of the title encompassing a previous 10-year period to verify that there are no liens or encumbrances recorded against the property and also verifies that the seller has the capacity to transfer ownership.

What are the Notario Publico’s responsibilities during the property transaction?2020-03-30T12:59:14-04:00

It is required to obtain a Notario Publico in Mexico (similar to a notary public in the U. S.).

The Notario Publico’s responsibilities include reviewing all required documents with respect to the sale of real estate, including the assurance that all required documents have been reviewed and executed properly, in accordance with the laws in Mexico.

In addition, the Notario Publico makes sure that all legal formalities have taken place as well as collecting all taxes and forwarding such monies to the Tax Authorities in Mexico. If the buyer or seller requires legal advice, they should hire legal counsel that is experienced in Mexico and U. S. real estate law.”

What is a Notary Public?2020-03-30T12:57:49-04:00

The responsibilities of a Notary Public in Mexico are completely different than that of the United States. In Mexico, the governor of a Mexican state appoints a Notary Public for life in a given geographical location (a town, a district). All Notary Publics must be licensed attorneys in Mexico, which requires a similar process of that in the U.S. to become an attorney. They then must apprentice for several years with a Notary Public before becoming one.

Do I need title insurance?2020-03-30T12:56:31-04:00

While title insurance is not required in Mexico, Global Mortgage requires title insurance to obtain financing. This is acquired after an extensive title search on your property and is part of the loan process. Title insurance is meant to help protect your investment should the property you buy subsequently turn out to have liens.

What is an escrow account?2020-03-30T12:55:42-04:00

The concept of escrow is fairly new in Mexico and has no set standard for taking place, as is customary in the United States. Global Mortgage adheres to the U.S. processes of an escrow account, utilizing an impartial third party, namely an escrow company. The third party is entrusted with the job of seeing that the transfer of ownership from the seller to the buyer takes place according to the terms of the written contract agreed upon by all parties involved. The third-party escrow agent holds any funds securely until the point when every one of the conditions has been realized as instructed by the agreement. The agent then disburses the funds to the designated parties at the assigned time as illustrated in the escrow agreement signed by both the buyer and seller.

Who pays the closing costs?2020-03-30T12:54:01-04:00

It is customary that the buyer pays the transfer of acquisition tax and all other closing costs, including the Notary’s fees and expenses. The seller pays his capital gains tax and the broker’s commission.

What are my estimated closing costs and other expenses?2020-03-30T12:53:07-04:00

Closing expenses vary.  Global Mortgage will generate an estimated closing cost statement specific to your needs

Do I lose possession of the property after the 50-year term expires?2020-03-30T12:52:16-04:00

No. Under the trust agreement, the beneficiary has a contractual right with the Mexican bank to all benefits that result from the use or sale of that property. As trustee, the bank has a fiduciary obligation under Mexican law to respect the rights of the beneficiary. The same beneficiary has a contractual right to renew the bank trust for another 50-year term upon expiration and can make multiple extension requests.

Is the Fideicomiso Trust renewable?2020-03-30T12:51:18-04:00

The duration of the “Fideicomiso” Bank Trust is 50 years through a Mexican financial institution and can be renewed multiple times for other 50 year periods.

Does the trustee bank consider my property their asset?2020-03-30T12:49:44-04:00

No, property held in trust or Fideicomiso by a trustee bank is not an asset of the bank. If the bank goes into financial difficulty, the property is simply transferred to another trustee bank. These laws are federally imposed.

What is a Trustee Bank?2020-03-30T12:48:41-04:00

The Mexican bank, or Trustee, takes instruction only from the Beneficiary of the trust (the buyer). The beneficiary has the right to use, occupy, build upon, improve, lease and possess the property. The beneficiary may also instruct the Trustee to transfer the rights to another qualified buyer or bequeath the property to an inheritor. The initial term of the trust is 50 years; however the trust can be renewed for additional periods of 50 years indefinitely, providing for long-term control of the asset. Global Mortgage handles all aspects of the bank’s trust for the buyer as part of the loan process.

Can Mexican foreigners (U.S. citizens) own real estate in Mexico?2020-03-30T12:31:59-04:00

Yes. Mexican foreigners can own property in Mexico via a Mexican land trust called a fideicomiso. The trust has a 50-year term and can be renewed perpetually to allow for long-term control of the asset. The property can be willed from generation to generation. Global Mortgage creates a fideicomiso for you as part of your loan process.

If I decide to sell my property, can anyone buy it?2020-03-30T12:44:51-04:00

Yes, anyone can buy your property. At this time, Global Mortgage is providing financing only for U. S. citizens. A foreigner can purchase the property provided they set up a bank trust. Global Mortgage provides this service as part of the loan process.

What are property taxes in Mexico?2020-03-30T12:43:45-04:00

Property taxes in Mexico are usually considerably less than the U.S. Taxes are based on the size of your property and location and in most cases, are less than $1,000 a year.

Can I get credit in my country for the income tax I paid in Mexico?2018-11-21T13:28:55-05:00

You may be eligible to get credit in your country for income tax paid in Mexico.  Seek advice from your financial advisor for your specific situation.

I am selling my property. Do I have to pay taxes on the transaction?2018-09-27T22:52:02-04:00

Yes. Since the real property is located in Mexico, Mexican law deems the source of income to be located within its jurisdiction, making it subject to taxation by Mexico. This is consistent with tax practice and legislation all around the world.

Can I take cash-out of my existing property in Mexico?2020-03-30T12:40:48-04:00

Yes, Global Mortgage offers cash-out refinancing to existing property owners of up to 60% LTV. In this example: For a $400,000 home, the maximum available loan amount we offer is $240,000. Any existing lien(s) against the property would have to be paid off with the new loan funds at closing so that Global retains a 1st lien position.

Do you finance land or construction?2020-03-30T12:39:33-04:00

At this time, Global Mortgage only finances pre-existing homes.

How much can I borrow?2020-03-30T12:38:19-04:00

Currently, Global Mortgage offers competitively priced mortgage loans from $100,000 – $2.5 million on residential property in Mexico up to 60% of the appraised value of the property (Loan-to-Value – “LTV”) to qualified individuals.

For example: For a $400,000 home, the maximum loan amount would be $240,000.

How do I qualify for a mortgage?2020-03-30T12:36:35-04:00

The first step to qualifying for a mortgage is to fill out the pre-qualification form.

Can I finance property in Mexico?2020-03-30T12:35:08-04:00

Yes. Global Mortgage provides financing to U.S. citizens on Mexican real estate. To apply, go to the Pre-qualification application and enter your information.

How does transfer of real property in Mexico work?2020-03-30T12:34:00-04:00

Any real estate transfer in Mexico must be arranged in a public deed prepared by a notary public and filed accordingly with the Public Registry of Property that has jurisdiction over the real property. Purchases by foreigners must also be filed with the Mexican Ministry of Foreign Affairs.

What rights do I have as a buyer of Mexican real estate?2020-03-30T12:29:36-04:00

A buyer of Mexican real estate holds the same rights as a property owner in the U.S., including the right to enjoy, sell, rent, improve the property, etc. This ownership is acquired through a fideicomiso or bank trust. The Bank Trust is a legal substitute for fee simple ownership (as is ownership in the U.S.), but the Trustee is the legal holder of the property. The rights to the property may also be transferred to a third party or passed on to named heirs. Sometimes, the property being purchased is already held in a trust. If this is the case, the buyer has the option of assuming that trust or having the property vested in a new trust.

Is a Temporary Resident Visa required to buy property in Mexico?2020-03-30T12:32:35-04:00

No. In order to acquire property, it is not necessary to possess a Temporary Resident Visa.

If you sign a contract, rent a house or condo, buy a house or condo, or lease property, you are no longer a “tourist” and therefore, are invited to apply for a Temporary Resident Visa.

FAQs about financing real estate in Mexico

If you have any additional questions or concerns, Global Mortgage is staffed with skilled professionals who have, or will find, the answers to all your questions.  Don’t hesitate to contact us