What is FECI in Mortgage Loans in Panama?

The Special Fund for Interest Compensation (FECI), funded through a 1% annual interest surcharge on mortgage and commercial loans exceeding $5,000, plays a crucial role in Panama's financial landscape. Enacted by Law 4 of 1994, FECI is overseen by a commission comprising the Ministry of Economy and Finance, the Director General of Revenue, and the Superintendent of Banks. This fund supports borrowers seeking to buy property or secure loans in Panama.

As the governing body, the Superintendence of Banks of Panama employs technical and administrative staff trained to execute its functions. They provide advisory services through their website, www.superbancos.gob.pa/Feci/Consultas, assisting individuals and legal entities in navigating mortgage and loan processes.

For mortgage loans, banks verify eligibility for FECI exemption based on specific criteria. These include the purpose of the loan, whether for purchasing or constructing a primary residence in Panama. Only one qualifying loan per borrower is exempt from the 1% withholding tax, ensuring clarity and fairness in loan application processes.

Regarding loans for retirees and pensioners, FECI exemptions apply under specific conditions outlined in Law No. 6 of June 16, 1987. Loans secured by bank deposits (savings or fixed-term) in Panamanian banks are also exempt from the 1% withholding tax, promoting financial flexibility for borrowers in Panama.

In conclusion, FECI supports Panama's real estate and financial sectors by facilitating access to mortgage and commercial loans while ensuring compliance with regulatory standards. For more information on FECI and loan eligibility, visit www.superbancos.gob.pa/Feci/Consultas.

Last update: 04/07/2024

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