
Current Situation for Foreign Buyers
At the present time, there are non-Colombian real estate investors who would like to purchase real estate in Medellin as well as other parts of Colombia, but need mortgage assistance. Unfortunately, this is quite difficult in that Colombian banks are not set up to handle foreign mortgages so a foreigner would have to have an established long-term credit history in Colombia, including in most cases, property ownership. This of course does not bode well for first time foreign buyers real estate buyers.
The Colombian Mortgage Market
Please be aware. Mortgages in Colombia, even for the Colombian citizens, are difficult and quite conservative. Typically, such mortgages require a minimum of 30% down payment with amortizations of 5-20 years. These fixed rate mortgages are now in the 12-16% range (in 2024) and require an established credit history including proof of acceptable income.
Such conservative financing prevents leveraged real estate investing and is one reason the Colombian real estate market is steady and not overheated. In fact, about 95% of Colombian real estate is paid in cash. It is a big reason why Colombia did not, and does not, have a real estate bubble like the one in the United States in 2007-2008. Another reason is that there is very little pressure on sellers to sell because the cost to carry is much lower (lower taxes, utilities, administration). Thus, there is no forced panic selling.
Alternative Financing Options
Primavera Realty Medellin always suggests to foreign buyers seeking leverage to try to secure it in their home countries. For example, in the United States, perhaps a second mortgage or a home equity loan will suffice. Maybe a loan from friends and family. Although US banks will not issue mortgages for Colombian real estate, perhaps a business loan can be secured if you are operating a business. Finally, a self-directed IRA (these are easy to set up if you have an IRA or 401K) can provide non-leveraged financing with tax benefits.
New Construction Payment Plans
One other option that offers limited financing for foreigners is in Medellin new construction. Typically, the new construction buyer will be required to put down 20-30% upon signing a sales contract. The second step is for a monthly payment plan over 18-24 months where another 30-40% is paid during that time period and finally, the balance at closing of 30-50% of the sales price. Primavera Realty Medellin has excellent new construction listings with leading developers in El Poblado, Envigado, Laureles and Sabaneta.
If new construction financing is of interest then please view our New Construction Properties or convey this to your assigned Primavera Realty sales agent.