The Complete Guide to Private Mortgages in Panama and How They Can Benefit you

What Exactly is a Private Mortgage?

A private mortgage in Panama is a financial arrangement between a borrower and a private, individual lender. The lender provides financing to the borrower to purchase real estate. Lenders typically offer mortgages to family, friends or others with personal relationships and in return they generate investment profits from the interest.

How Much Would It Cost To Get a Private Mortgage In Panama?

As we’ve mentioned in our Real Estate Mortgages in Panama Page, both nationals and foreigners can access mortgages for Real Estate, and loans are based on the applicant’s ability to pay and not on credit history as is usual in North America.

However, mortgage conditions and requirements to obtain a loan depend on each bank, and that’s when private mortgages come in handy.

In Panama, there are private lenders that do not ask for as many requirements as the bank does, and are willing to lend 50%-60% of the value of the property.

Pros and Cons of Getting A Private Mortgage In Panama

There are many reasons why you might consider private mortgages, some of them include:

Faster financing: getting a loan from the bank is often a lengthy process, and that’s if you get approved in the first place. Since in private mortgages there is much less documentation involved and fewer hurdles to overcome, financing can be provided in days, not weeks or months.

Easy to qualify: perhaps the biggest advantage of a private mortgage is how easy it is to qualify. Although you may still be asked to provide your credit history and proof of income to determine interest rate and payback period, having a low credit score or an unstable income won’t necessarily be an obstacle.

Greater flexibility: banks usually offer some standard mortgage terms from which you can choose. However, because a private loan is not subject to the same rules and regulations, you have greater flexibility to set the terms that work best for both you and your lender.

It is important before making any major financial decisions to do your research and understand what risks are involved. Private mortgages may seem like a good option, but they are certainly not for everybody. Some cons include:

Higher interest rates: compared to a traditional bank loan, private mortgage loans have higher interest rates, up to 20% in some cases. Short payback periods: payback periods are usually shorter. Most traditional mortgages are paid back in 30 years, while most private mortgages are paid back between 6 months and several years. This short period of time might not be ideal for a family looking to settle down.

Do You Need A Private Mortgage?

The process of obtaining a private mortgage is easier when you have the proper legal assistance that helps you evaluate risks and benefits. Send us a note to to learn more about private mortgages and clarify your doubts regarding the topic.

Published June 16th, 2022, as Commentary on Real Estate by Johana Sum