Luigi Wewege from Belize’s Caye International Bank looks at the advantages of international lending, and how it may be better to finance your project or real estate purchase from your offshore bank rather than your domestic one.
Part of your strategy to maximize the power of your offshore bank accounts is to make the most of all the financial services available to you. That includes looking into offshore lending options. The purpose of the loan may be to finance a real estate transaction, start a business, or finance some other project.
You could use domestic financing in your home country for all these, of course. But it’s worth checking the benefits that can come your way by using your offshore bank or institution instead.
Here are some of the advantages to consider when deciding where to finance your project.
1. A greater degree of privacy
You already know offshore institutions guard their clients’ information diligently. That applies to more than the checking, time deposit, and other savings accounts you have in place. If you decide to pursue financing, say, a mortgage for an international property, the same degree of privacy extends to the arrangement.
What may surprise you is that the security measures taken to protect your privacy may be more than what your domestic bank would do. You may find the offshore institution you’re dealing with goes even further with its security measures.
See it as one more way to ensure that only those who need to know have any idea about the financing, or what you intend to do with it.
@luigiwewege from Belize’s @CayeIntBank offers six great reasons why buying a vacation home overseas can be an excellent investment, offering short and long-term benefitshttps://t.co/Sb1YWVmmAq
— Central America Living (@VidaAmerica) September 20, 2022
2. Favorable banking laws and policies
International banking regulations and laws vary from one nation to another. You can use that to your advantage by learning more about the laws in the countries where you want to set up your international bank accounts. As you look over those laws and regulations, make sure you understand how they apply to non-citizens or expats who may decide to live in those nations.
Dig deeper and look at the policies that specific international banks have in place. While all policies must comply with banking laws and regulations in that nation, there may still be flexibility in how they apply them. Your goal is to understand how the laws and policies in each nation might be more favorable than what domestic lending would provide.
3. Lock in terms at lower interest rates
Interest rates are a primary concern when it comes to lending. You already know what interest rate you can lock in at home, but what could you enjoy by opting for international lending? The only way to find out is to explore the interest rates available to offshore clients in other countries.
You may find several countries offering more competitive rates. Moreover, you may also find the way they apply the interest rate more advantageous. Look beyond the rate, and determine how often it’s compounded on your outstanding balance. That makes it easier to project how much you will repay over the life of the loan, and decide which lending strategy allows you to come out ahead.
4. Borrow a greater percentage of a loan
You may quickly learn from domestic borrowing that institutions are not likely to cover the entire balance of a purchase except under specific circumstances. The likely scenario is that a lender will offer financing for up to a certain percentage of the appraised value. It’s up to you to come up with the rest as a down payment.
The same is likely to apply to securing international financing, with some differences to note. One is you may not have to come up with as much of a down payment. That’s because the international lender may be willing to supply more of the total purchase price.
Another possibility is that while you may not qualify for 100% financing at home, securing an international loan that takes care of the entire purchase may be possible. You still enjoy competitive interest rates and affordable installment payments, but it’s possible to hang on to your other assets and use them for other wealth-building activities.
5. Borrow in different currencies
A general rule of thumb is to set up international financing using the currency associated with your home country. Oftentimes, that’s the most practical solution. This is particularly true if that currency is stable and the exchange rate remains favorable.
It never hurts to look at all your options, though. You may find setting up the financing in a different currency would help you save money. That’s true if the exchange rate between your nation’s currency and the currency used increases your buying power. Look at the history of the two currencies and how the rate of exchange has shifted over the last decade.
6. Tax breaks not available in home country
Taxes are always something to consider, even with international loans or mortgages. You already know what to expect from the tax structure at home. What you need to determine is the type of tax obligation you’d assume by using international financing.
As with banking laws and policies, tax laws vary between nations. You may find you owe little to no tax on that international loan. There may or may not be an annual fee due by specific dates of the year. Identify all taxes and fees that would apply in a particular nation and compare the resulting figure to any annual tax obligation at home. You’re likely to find international lending results in less of an obligation.
7. Finance in a more conducive political and economic climate
Today, it’s impossible to ignore the political and economic activity taking place around the world. What happens in some nations exerts significant influence elsewhere. Keeping that in mind, you may find what’s currently happening at home has a minimal impact on the economy, or the political status in the nations where you have your offshore accounts.
In other words, you may find that opting for international lending would allow you to enjoy a more stable setting regarding political issues and even the state of the economy. Notice what’s happening now and the projections for the next decade or so. Back that up by looking at how the nation fared in years past. Basing your lending activity within that country may be more than a practical financing decision; it might give you more peace of mind.
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— Central America Living (@VidaAmerica) August 17, 2022
Are you thinking about the benefits of international lending?
One or more international loans can aid in acquiring more assets and enhance your financial well-being. Compare what you could lock in at home with what you could do in an offshore setting.
Caye International Bank in Belize can help you explore these options and come up with a plan that’s to your advantage. Contact the Caye team today and learn more about what international lending can do for you.
Luigi Wewege is the President of Caye International Bank, headquartered on the island of Ambergris Caye, Belize. He is also the published author of The Digital Banking Revolution, now in its third edition.
