How to Make the Dominican Republic Your Second Home
Jul 09, 2022
There are numerous reasons that may trigger a foreigner’s decision to purchase a home in the Dominican Republic. The process of getting land or building a new construction property has been simplified. This is what’s motivating real estate purchases and foreign investors.
The nation is in strong financial expansion creating an environment beneficial to all sectors, including real estate. Numerous foreigners decide to a home which they utilize a couple of months out of the year. During the other months, they lease the property and generate lucrative returns.
The advancement of tourism, which is among the nation’s currency suppliers, is booming so the federal government is now concentrating on high-end tourists. This form of tourist needs privative lodging centers far from frantic hotels. The construction of elegant houses is a perfect service for individuals seeking to invest, unwind and enjoy additional passive revenues.
Why Buy Property in the Dominican Republic?
Houses of all types and in all price ranges are readily available in the Dominican Republic. As such, prospective buyers must ask themselves why they are investing in a second home in the Dominican Republic.
Interests are divided into two categories: either you have a business interest or a personal interest to invest in a second home in DR. When it comes to personal interest, the beaches of the Dominican Republic will thrill you. Not to mention living better here costs less. The construction of a high-end home in the Dominican Republic can be your dream come true.
For those who have a business interest in the Dominican Republic, it is possible to monetize your Dominican Republic home by leasing the property. The real estate gains are continuously increasing, so if a property is purchased with the primary purpose of just being a vacation home, it is best to consider renting it out.
The high season in the DR is rather long compared with other countries. In general, you can count roughly 6 months of the high season where rental rates increase by 20 to 50% percent. Of a meager 1% of yearly property taxes, anticipate paying no taxes on the incomes made from your leasings.
Cabarete is a Hot-Spot for Vacation Homes
Aside from basic decisions regarding whether to invest or not, you must also consider where you would like your future property to be located. Some locations within the Dominican Republic are seeing far more development than others. For example, currently, Cabarete is among the most popular area in the DR in regards to real estate financial investments and development. The marketplace is sustained by the regional foreigners who invested and keep investing in the country and growing middle class from the huge cities tired of Punta Cana and looking for a piece of paradise at still a cost-effective cost.
How to Get a Loan with a Local Bank for your second home in the Dominican Republic
Home mortgage loans are readily available to the United States/ Canada/ English and Dominican people with some regional banks. In fact, RelocateDR is now a preferred partner with Scotia Bank so we have all the information needed to get you in touch with a mortgage broker.
The very first thing to do when looking to purchase a property in the DR (with a loan) is to confirm if you can purchase it with financing.
We’ve broken down what you need in order for Scotia Bank to approve you for a mortgage:
- Last 2 years of income tax returns.
- Credit score minimum of 680 for Canadians, or 660 for Americans
- 1:1 Net worth meaning your assets must be greater or equal to your liabilities.
- 35% minimum debt ratio meaning you need to have more assets than debt.
- Copy of your passport plus other recognition
- Proof of Employment
- A Bank reference from your primary bank.
You’ll need to remain in the Dominican Republic to sign the actual agreement personally. It may be possible to send out somebody with a power of attorney to sign in your name.
If you choose to build a new construction home with a regional contractor, you have the ability to take 2 different loans; one to purchase the land itself and one to develop your home.
For other immigrants, loans are likewise offered with a couple of extra files needed. The entire financing process can be done via email and phone up until the point you are signing.
When the bank alerts that you pre-qualify for a loan for a new construction , you will be directed to an online form. This confirmation takes 1 to 2 weeks. At this stage, there is a 99% possibility that you will get approved for the loan.
What to Expect from Financing
The bank will generally provide you up to 70% of the value of the property or less. In other words, you need to have a 30% down payment. Scotia Bank provides a preferential in between 5 and 6% (Dec. 2019) for a duration of approximately 25 years, which is rather affordable and basic.
When the overall value of the land is paid, the title of ownership is transferred to you. When you choose to begin the construction, the bank will lend you the cash by installments as the construction advances.
The interests will be determined just on the quantity lent, and at the end of the construction, the loan will change into a traditional home loan.