Law No. 3 of May 20, 1985, on Preferential Interest Rates, which has been updated, the last time in 2012, was created as a means to encourage and facilitate property acquisition in Panama.

It benefits buyers with a lower interest rate compared to market mortgage rates for properties valued between $35,000 and $120,000.

Specialist José Canto – Financial Advisor – explains clearly what this entails:

"The borrower pays an interest rate based on a classification of housing price ranges: from $0 to $35,000, from $35,001 to $65,000, and from $65,001 to $120,000, with rates ranging from 2.25% to 4.25%-5%, depending on the housing price range."

In the case of homes priced between $35,000 and $65,000, the government currently subsidizes 4% interest. If someone wants to buy a house in this price range and the market rate is 5%, the client will only pay 1%. For homes priced between $65,001 and $120,000, the subsidy is 2% interest. If the mortgage rate in the market is 5%, the government subsidizes 2% and the client pays 3%, which is a great benefit for the professional middle class" (Article "Mortgage Loans with Preferential Interest" - Ellas Magazine).

This process does not involve the client directly, as the banks and the government are responsible for it. The term is 15 years, so the mortgage cannot be shorter than this period. After this time, the subsidy is removed, so it is important to keep in mind that the price we pay for our home will increase after 15 years.