Part of your strategy for maximizing the use of your offshore accounts is to make the most of all the available financial services. That includes looking into options for offshore lending. The purpose of the loan may be to finance the purchase of real estate, obtain seed money to open a business, or just to finance some other purchase you will need in the future.
You could use domestic financing for all of these and any other project you have in mind. What’s different are the benefits that can come your way by using financing opportunities through your offshore bank or institution.
Here are some of the advantages to consider before you make any decisions about where to finance your project.
Greater Degree of Privacy
You already know that 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, such as a mortgage for an international property, that 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 similar to what’s done domestically. You may find that the offshore institution you’re dealing with goes even further regarding security measures. See that 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.
Favorable Banking Laws and Policies
International banking regulations and laws do vary from one nation to another. You can use that to your advantage by learning more about banking laws in any nation where you want to set up international bank accounts. As you look over those laws and regulations, make sure you understand how they apply to non-citizens or even to expats who may choose to retire in those nations.
Dig a little 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 some flexibility in how they are applied. Your goal is to understand how the laws and policies in each nation might be more favorable than what domestic lending would provide.
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 nations.
You may find several nations that offer more competitive rates. Moreover, you may find that the way the interest rate is applied is 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.
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, although some differences are noted. One is that 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.
Borrow in Different Currencies
A general rule of thumb is to set up international financing using the currency associated with your home country. In many cases, that is the most practical solution. This is particularly true if that currency tends to be stable and the exchange rate remains favorable.
However, it never hurts to look closely at all of your options. You may find that 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 purchase power. Look closely at the history of the two currencies and how the rate of exchange has shifted over the last decade.
Tax Breaks Not Available in Home Country
The issue of taxes is always something you want to consider, even with international loans or mortgages. You already know what to expect from the tax structure at home. What remains to be determined is the type of tax obligation you would assume by using international financing.
As with banking laws and policies, tax laws vary between nations. You may find that 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 that international lending would result in less of an obligation.
Finance in a More Conducive Political and Economic Climate
In today’s world, it’s impossible to ignore the political and economic activity taking place in different nations. What happens in some nations exerts significant influence in other parts of the world. Keeping that in mind, you may find that what’s currently happening at home has a minimal impact on the economy or the political status in the nations where you have based 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.
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 an offshore setting.
The team at Caye International Bank 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.
This article originally appeared on CentralAmerica.com.
