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If you go to the expat forums here and ask about getting credit in Mexico, especially a mortgage, you’ll hear outdated lies like “Cash is king” and that it’s impossible for a foreigner to get credit here. There really are not a lot of resources for English-speaking immigrants to Mexico as we’re seen as expats who will always have a foot in their home country. Well, returning to Canada is a non-starter for me, so I need to figure out how to make a life here, and figuring that out involves a lot of figuring things out for myself because the resources just aren’t there. So maybe this post will help someone else like me in building their life in Mexico. For those who are new here, note that I do speak Spanish and do everything in Spanish, and that that makes a bigger difference than the non-Spanish speakers realise.
In January 2021, I was given the opportunity to buy the house I’m renting. The way I pulled that off is alien to Americans and Canadians, but my bank account manager said it is absolutely the way things are done here, by building a deep personal relationship with sellers in order to make a deal like they would with a family member. But even if you didn’t have that, I think that my experience in applying for a mortgage will still be valuable.
The deal was that the sellers would act as the bank for three years, at which point they would consider themselves paid and I’d have to make a huge balloon payment to clear the mortgage on the house, whether that be with cash or by obtaining my own loan.
I knew that paying cash was going to be near impossible so I immediately looked into what I would need to build a credit history here to be able to have a chance of qualifying for a mortgage by February 2024. The steps really aren’t that different than those of establishing a credit history in Canada — you just need to find the first bank willing to extend you credit.
I’d had a bank account with HSBC for a few years, so I started with them and asked for a credit card, with the hope being that I could build credit with them and just do a transfer of the existing mortgage they were holding from the sellers’ names to mine. But I was not surprised when I was declined as HSBC treated me like a tourist through our entire relationship, going so far as to freeze my account every time I bought something they didn’t think a tourist should be buying.
I decided to try out BBVA and they were great from the beginning. They did not fuss about my being only a permanent resident and gave me a bank account, a savings plan, and a path towards getting my first Mexican credit card. From that point, my journey to building my credit here was easy.
I got a couple of increases on my card and before I knew it, I had an offer on my phone to take a personal loan. I was advised to take the loan, make payments for a few months, and then pay it off. The loan was stupidly/dangerously easy to get — I literally just had to press “accept” on my phone and I had the funds. The interest rate was sky high, as interest rates usually are here, but it was a means to an end.
The next step was to see if another bank would extend me credit, so I was advised to try out for something like the Costco or Rappi Visa cards. The Rappi card was interesting to me as this is a delivery service I use a lot and I could do the entire application process through my phone (rather than having to travel to Costco). I was immediately approved and the card was delivered to me the next day!
At this point, I was advised to not ask for more credit and to keep my credit card balances low. I do have a balance on my BBVA card for items bought with “months without interest” promotions, but was told that’s not a problem as I’ve been making the monthly payments and the card balance is very low compared to the limit (which is now six times what it was when I opened the account).
So to recap, over two years I’ve obtained credit products and used them responsibly. I’ve also been careful to even out deposits into my bank account to show that while I might be an “autonoma” (freelancer) I have steady, regular, reliable income. Also part of my credit history, although not nearly as important to a computer algorithm as I’d hope, is that I have been paying the existing mortgage myself for over two years without fail.
In late July, I went to to the bank to see if I was ready to apply for the mortgage. I was told that if we did this, we’d have two to three months to close, so I had to make sure the sellers would not mind closing out the contract early. They know I’m at this stage and are standing by, so I’m good to go.
Now, here is where my application process is probably going to wildly differ from someone walking in off the street with a house they are interested in buying and no equity in said house. You’re probably going to need to have up to 60% cash available as a deposit. I, on the other hand, am looking for a loan for less than half the value of the house I’m buying. There is absolutely no way the bank can lose in such a scenario, so spoiler, I was approved for a loan to cover not only the existing mortgage balance, but also all closing costs, with enough leftover to do some renovations if I want.
Here’s the paperwork the bank needed for my mortgage application. By the way, they wanted everything digitally even though I arrived with a stack of paper!
-copy of my Canadian passport photo page
-copy of my permanent resident card
-copy of my birth certificate (which was thankfully accepted despite being in French)
-copy of my CURP (“social security number”) certificate
-copy of my “constancia fiscal” with RFC, which is a document from SAT/Hacienda saying I’m tax-compliant and which provides my tax ID number. I got this back last August, clever me!
-comprobante de domicilio (proof of address, a power bill)
-three most recent bank statements
-three local, preferably Mexican, references (I put a call-out to almost everyone I know and was shocked by how fast the references came in, with some, like my handyguy, having everyone in their family send me their info!)
In addition to this, added to the file were the house purchase contract, the last mortgage statement from HSBC, and a letter I wrote outlining what I was asking for and why. Ultimately, the contract means nothing to this transaction, but my account manager used this extra paperwork to push through with a more senior person after I was denied by the computer algorithm.
Once all of this was reviewed, I was further asked for statements from my Canadian bank and PayPal as the source accounts for my deposits here and an explanation of where the money was actually coming from. I gave a full year of statements and supporting documentation showing steady payments from the same clients and said I could go back a full three years showing these same clients paying me every month, and even further back showing that I’ve been supporting myself for 12 years as a freelancer, which is how I got my initial residency visa.
After all this was reviewed, it was time for a telephone verification. This took a few tries as their phone system connection isn’t great and I couldn’t really understand the callers. They finally found a line with a better connection and then the call was easy to deal with, so it really wasn’t a language barrier issue. I can’t remember everything they asked me but some of the questions were:
-When did you last apply for a credit product, whether approved or not?
-What is the balance on your non-BBVA credit product?
-What is the balance and limit of your BBVA credit card?
-What is the balance on your store credit cards, if any?
-Do you have a car loan?
-Then there were some fairly random questions, like a multiple choice of which city I live (none of them), that I think were for identify verification.
-Finally, some questions about the service I’ve received from BBVA.
I didn’t find anything up to this point particularly onerous and I was able to come up with all paperwork and reports in minutes, so I wasn’t scrambling for anything bizarre.
This morning, I got confirmation that my loan was approved and the terms thereof. Honestly, it feels like I won the lottery.
Next steps are to do the valuation of the house and the fideicomiso (trust), so I need to get a huge pile of documents from the sellers. They travel a lot and are always busy, so I told them we have three months to close and I’m not in a hurry, which I’m really not now that I know everything is in place.
I feel like I’ve reached port after an extremely long voyage that started on September 4, 2008, when a naïve and intrepid girl pointed an RV north into the wilderness of l’Abitibi. I thought my port was going to be Haven, I honestly did, and I would have been happy for the simple future that Haven would have afforded me if I could have made a living there, but it was just a port of call on my way to a life I hadn’t even dared to dream of and so am still having difficulty envisioning.
“Peace and rest at length have come
All the day’s long toil is past,
And each heart is whispering, ‘Home,
Home at last.”