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Mortgage loans are quickly available to US - Canada - Europaen and Dominican citizens with any Bank, our local financial partners for real estate transactions. If you are looking at a built property or if you want to buy a land and build a house on top of it, in both cases they will help finance your project.
The first thing to do when looking to buy a property in the DR (with a loan) is to verify if you can actually apply for a loan. It will makes things move faster if you are decided on a specific property and also help your negotiation with the seller. The documents required by the Banks are the following:
- Copy of your passport plus other identification
- The two last tax returns
- Employment letter if employed
- A bank reference from your main bank
For other foreigners, loans are also available with a few additional documents required. All these documents can be send via email.
The bank will usually lend you up 70% of the value of the property, or less if you wish so… Meaning that a down payment of at least 30% of the value of the property will be necessary from your side.
The value of the property taken into account is the lowest amount between either the estimated value or the agreed buying price of that property. The estimated value is the value given by the "assessor" from the bank who will estimate the property according to a set of criteria such as lot size, built size, built year, location, number of bedrooms, materials used, etc. By experience, this value is usually close to the selling price, still expect 10% variation to be on the safe side.
Once the bank notifies you that you pre-qualify for a mortgage loan or a loan for a new construction (this verification takes 1 to 2 weeks) you will be given access to an online form available in English which you must fill in. At this point, there is 99% of chance that you will qualify for the loan.
Once the terms are satisfying for both parties, you’ll have to be in the Dominican Republic to sign the actual contract in person. You might be able to discuss with the bank to send someone with a power of attorney to sign in your name.
Most national banks have higher interest rate than our home country. It is usually at 7 to 10% and sometimes even greater, but Scotia Bank offers a preferential between 5 and 6% (Dec. 2019) for a period up to 25 years which is standard and quite reasonable.
If you decide to build a house with a local constructor, you are able to take 2 separate loans, one to buy the land itself and one to build your house. Before or after having reserved the lot you set your eyes on (with usually 10% of selling price), you’ll need to secure financing if needed.
Once the total value of the land is paid at the signature of the Act of Sale, the title of ownership is transferred to you. Then when you decide to start the construction, the bank will loan you the money by installments as the construction progresses.
At each step of the construction (generally 3 or 4 phases divided in payments of 20 to 30%), the bank will send an expert "assessor" to assess that the money loaned did go into the construction and not the pocket of the constructor. Only when all the boxes are checked, the bank will send you the next installment which you will send to the constructor, thus retaining the control over the process and your money.
The interests to be paid will be calculated only on the amount loaned and at the end of the construction the loan will switch into a classic mortgage loan.