You’ve found the perfect overseas property and now you need the funds to buy it.
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 Belize, a relative newcomer to international banking whose industry only began in 1996. Panama is the 800-pound banking gorilla in the region and has been for many years, but it doesn’t provide mortgages to North Americans buying property outside of Panama.
So, when it comes to securing mortgages in the region, more and more folks are looking to the tiny nation of Belize. A country long known for diving, fly fishing, and archaeological treasures, it’s now becoming known for mortgage lending, conservative banking policy, and exceptional personal service.
English-Speaking Belize Makes Banking Easy
For mortgages, consider Belize for two main reasons. First, Belize’s official language is English. Second, it follows a Common Law system familiar to most North Americans. Both are critically important to the borrower, because what has historically been a complicated and difficult process in Central America is, in Belize, simple and straightforward.
The primary reason many people are now obtaining mortgages through banks in Belize is because all official documents are in English. This might seem like a no-brainer on the surface, but you need to remember that in other Latin American countries, all legal documents are written in Spanish.
Even more importantly, the Spanish version of all documents is the legally binding version. Official translations are expensive, and in the end, they are just that, an official translation. The legally binding document is the document in Spanish.
Civil Law Versus Common Law
The second issue is more difficult to explain in just a few sentences because it deals with the huge differences between Civil and Common Law. Hundreds of thousands of pages have been written on this topic. To any lawyers reading 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 two legal systems when applying for and receiving a mortgage.
The Spanish-speaking countries of Latin America use Civil Law systems sometimes called Roman or Napoleonic Law. Beyond being unfamiliar to most North Americans, this system 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, if considered at all. While it’s a good system because it offers all citizens a rule book to follow, it’s highly procedural and technical.
For example, any mistake in a legal document, even transposition of two numbers in a passport reference, can compromise the contract or agreement. It’s also a requirement that most documents be signed in person, with witnesses. Then all copies of documents are sealed and stamped by officials before becoming legally binding. In many cases the process is highly bureaucratic and cumbersome, leading to mistakes and errors that can later be used to invalidate an agreement.
Common Law is almost the opposite. It’s a bottom-up system of law where laws are created by the cases that are filed, and then by a judge’s ruling, which creates precedents. The spirit of the law, or the spirit of the contract, is not only admissible, it’s often a deciding factor in a case.
One major disadvantage of Common Law is that judges can 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 the Common Law system in Belize shine.
For instance, paperwork can be handled from afar saving huge expenses in air travel and time. Faxes can be used for instructions. Even email notifications are now permitted, if all parties agree. A loan can be requested, contracted, and funded remotely. This saves time, money, and hassle for all parties involved in the transaction.
How Is Belize Different?
Belize is becoming a leading Central American international jurisdiction with banking at its forefront. The growing number of international travelers and property buyers is creating an expanding market for these banking services. The banking industry is strictly regulated with one of the highest reserve requirements in the world set at a statutory minimum of 24%.
Belize has worked hard to make itself an attractive banking center. Mortgages for North Americans wanting to own property in the region are just one of the products offered to serve this growing population. Belizean banks also allow depositors to hold various world currencies and even offer loans in multiple currencies. This is especially important to Canadians who earn Canadian dollars and would prefer to repay loans in their home currency.
If you haven’t looked at Belize for your banking needs, it may be time to do so.
Michael Cobb