Financing for Canadians Buying Property in Mexico
Canadian buyers are often told that a Mexican property has to be an all-cash purchase. That is not quite true. Coldwell Banker La Costa works with Seaport Credit Canada, a Canadian financial services firm headquartered in Mississauga, Ontario with a branch office in Mexico, whose products are built specifically for Canadians buying real estate outside Canada.
How the Seaport structure works
Seaport's programs are built around your RRSP. In Seaport's own description, qualified Canadians transfer an existing RRSP to a new qualified RRSP on a tax-free basis, in order to invest in a Canadian Mutual Fund Trust, which is a qualified investment for RRSPs. The business of that trust is to provide consumer loans to creditworthy Canadian borrowers to finance down payments on vacation homes.
Two products sit on top of that structure:
- Vacation Home Buyers Plan (VHBP). Seaport's RRSP-linked route to funding a down payment on a vacation property.
- Canadian International Real Estate Loan (CIRL). For qualified Canadian investors, an Exempt Market Dealer invests available RRSP funds into Trust Units that support the loan. Seaport states that costs can be rolled into the loan, with no out-of-pocket expenses for qualified investors.
Two things we want to be straight with you about.
First, the Vacation Home Buyers Plan is not a Government of Canada program. The federal Home Buyers' Plan run by the CRA applies to a first principal residence in Canada and has a withdrawal limit. Seaport's VHBP is a private financing product inspired by it. The names are similar; the programs are not the same.
Second, this structure uses your retirement savings. We are a real estate brokerage, not a licensed financial advisor, and we will not tell you whether directing RRSP funds into a trust that finances your own loan is right for you. We are glad to make the introduction to Seaport. We would also encourage you to run it past a licensed financial advisor who has no stake in the property transaction.
The other routes open to Canadians
- Mexican bank mortgage. Available if you hold Mexican permanent residency, with a two to three month application process.
- Vendor take-back financing. The seller carries a portion of the price as a loan, often on a 20 to 25 year amortization with periodic balloon payments.
- Borrowing at home. The most common route by far. Only about 5 percent of transactions in this market involve direct mortgage financing in Mexico. Most buyers find it cheaper and simpler to raise funds in Canada against assets they already hold.
Note that MoXi, our U.S. lending partner, does not lend to Canadians. That program is for United States citizens only.
Talk to us first
We will tell you honestly which of these is worth your time, including the possibility that none of them are and you are better off arranging funds at home.
Or call us directly: +52 322 223 0055
Common QuestionsFinancing for Canadians
Can Canadians get financing to buy property in Puerto Vallarta?
Yes. Coldwell Banker La Costa works with Seaport Credit Canada, a Canadian financial services firm with its head office in Mississauga, Ontario and a branch office in Mexico, which offers financing designed specifically for Canadians buying real estate outside Canada. Canadians may also pursue a Mexican bank mortgage if they hold permanent residency, or negotiate vendor take-back financing directly with a seller.
What is the Vacation Home Buyers Plan (VHBP)?
It is Seaport Credit's financing structure for Canadians. In Seaport's own description, qualified Canadians transfer their existing RRSP to a new qualified RRSP on a tax-free basis, for the purpose of investing in a Canadian Mutual Fund Trust, which is a qualified investment for RRSPs. The business of that Mutual Fund is to provide consumer loans to creditworthy Canadian borrowers to finance down payments for vacation homes.
Is the VHBP the same as the Government of Canada's Home Buyers' Plan?
No, and this is an important distinction. The federal Home Buyers' Plan administered by the CRA applies to a first principal residence in Canada and carries a withdrawal limit. Seaport's Vacation Home Buyers Plan is a private financing product inspired by it, not a government program. Confirm all terms directly with Seaport Credit and with your own financial advisor.
What is the Canadian International Real Estate Loan (CIRL)?
CIRL is Seaport Credit's loan product for qualified Canadian investors purchasing real estate abroad. An Exempt Market Dealer invests the borrower's available RRSP funds into Trust Units that support the Seaport loan. Seaport states that costs can be rolled into the loan, with no out-of-pocket expenses for qualified investors. Contact Seaport for current rates and qualifying criteria.
Does this put my retirement savings at risk?
This structure uses your RRSP. That is a meaningful financial decision, and it is one we are not licensed to advise you on. We are happy to introduce you to Seaport Credit, but we would encourage any Canadian considering it to review the structure with a licensed financial advisor who is independent of the property transaction before committing retirement funds.
Can Canadians use the MoXi cross-border mortgage?
No. MoXi (Global Mortgage), our U.S. lending partner, provides cross-border financing to United States citizens only. Canadians should look at the Seaport Credit route, a Mexican bank mortgage if they hold permanent residency, or vendor take-back financing.
What are the alternatives to a Mexican mortgage?
Most buyers in this market do not borrow in Mexico at all. Only about 5 percent of transactions in and around Puerto Vallarta involve direct mortgage financing. The majority of buyers find it more efficient and less expensive to arrange funds in their home country against assets they already hold there, for example through a home equity line of credit.
Do Canadian buyers still need a fideicomiso?
Yes. Puerto Vallarta sits inside Mexico's restricted zone, which is within 50 kilometres of the coast. All foreign buyers, Canadian or otherwise, hold property there through a fideicomiso, a trust established with a Mexican bank, regardless of how the purchase is financed.