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What Would You Like to Know?
We answer your most frequently asked questions about home equity loans. We want our borrowers to be fully aware of the process and know that we are here to help reach your goals.

What can I use a home equity loan for?

You can use a home equity loan for anything. Common uses include debt consolidation (paying off high-interest credit card debt), home repairs or improvements, college for the kids, or to buy an automobile. You can also use a home equity loan to pay for medical emergencies or as a business investment to buy another piece of property.

What are the advantages of a home equity loan?

The major advantage of a home equity loan is lower interest rates. The interest rate you pay on your average home equity loan is lower than the interest rate you will pay on your average credit card by 3% to 4% or more per month. Home equity loans also have a lower interest rate than personal loans and other types of non-secured debt.

Why can’t I just get a bank loan?

We recommend you first apply with Costa Rican banks for a traditional mortgage. You’ll find that banks are highly risk-averse and have certain collateral, income and residence requirements. If you don’t fit within their set parameters it will be difficult to get a bank loan.

What are the loan requirements?

First and foremost, you need home equity — loan potential will depend primarily on the equity that your house provides. Requirements vary with every lender but usually include proof of income, assets, a plan for the use of funds & most importantly, how you plan to pay back the loan principal. We will normally loan up to 50% of current real estate market value.

How long can I borrow the money for?

Depending on the loan type, terms can range from 6 months for some hard money loans and up to 3 years for home equity loans. (some lenders will lend as long as five years)

What happens to my property title during the loan term?

A mortgage lien is placed on the property by the lender. In the case of some larger loans, lenders may employ a “fideicomiso de guarantía” (guarantee in trust), whereby the property title is conditionally transferred to a registered trustee for the duration of the loan.

Do you charge any up-front or hidden fees that I will have to pay before I get my loan?

No, we never charge hidden or up-front fees. If we do not fund the loan, there are no fees charged.

Note: Properties outside of the “GAM” (Greater Metropolitan Area) have a $250-500 site inspection fee.

What is the minimum and maximum that I can borrow?

The minimum loan size with Gap Equity Loans is $25,000 USD, in the case of a simple consumer equity loan. The maximum loan is in the millions, so please contact us and we can discuss the details if it is a large-scale project. We will consider lending up to 50% of current market value.

How much money can I borrow against my property?

We will lend up to 50% of the current market value of your property.

Who lends the money to me for my loan?

We work with a pool of investors that normally individually fund the loan. In case of large loans, several investors may pool together to fund the loan.

What are the closing costs involved in a home equity loan?

Closing costs and fees can include costs for things such as attorney fees, appraisal fees, accounting fees, broker fees, lender broker fees, reporting, mortgage cancellation fees, escrow fees, trust guaranty fees, government fees and stamps, and loan repayment collections if needed. Just like regular bank mortgages, the closing cost is taken out of the funds disbursed to you. Closing costs are usually between 6% to 10% of your loan amount.

What kind of interest rate should I expect to pay?

Typical equity loan interest rates charged to borrowers are from 10% up to 18% per annum, although every loan is different depending on the location of the property, risk, amount of collateral and duration.

NOTE: Lower interest rates are for qualifying “lowest-risk” equity loans, with characteristics such as: under 20% Loan-to-Value, essentially-guaranteed income (stock dividends, pensions, annuities) and a clear path to repayment of the loan principal.

What is an Interest Only Loan?

An interest-only loan is a loan in which, for a set term, the borrower pays only the interest on the principal, with the principal balance unchanged throughout the term of the loan. At the end of the interest-only term, the borrower will need to pay off the principal of the loan.

What does “Loan to Value” mean?

Loan to value (LTV) is a number obtained by dividing the Loan Amount by The Value of the Property. For example, if your property is worth $200,000 and you want to borrow $50,000, then your loan’s LTV is 25%. The lower the loan to value the easier your loan is to fund and the better the rates and terms.

CLICK HERE to use our FREE Loan to Value calculator.

How do you value my property?

We perform a site inspection. With over 30 years combined experience in Costa Rican Real Estate, we can give an accurate assessment of your property. Normally one of our agents will go out and view the property to determine how much we might want to lend. On larger properties, we may want to send out our own appraiser.

Note: Properties outside of the “GAM” (Greater Metropolitan Area) have a $250-500 site inspection fee.

Can you put a second mortgage on my home?

No, we don’t do second mortgages. If you already have a mortgage on your home you will need to borrow enough money to pay off the first so that the new lender can take that position.

What happens when the term of the loan is up and the borrower would like to extend their terms?

If everything is in good standing, we will attempt to rewrite the loan, possibly using the current lender or offer the loan to a new lender.

How long will a home equity loan take to close?

Every loan is different, but we have funded loans in less than 48hrs. The norm is one to two weeks after the application has been approved.

What exactly do the brokers fees pay for?

Most loans require a broker for the lender and a broker for the borrower so the fees will be split between all the brokers that are working on the loan.

Then there are the office expenses, which include advertising, website maintenance, salaries, internet costs, communications, due diligence. Gap Equity Loans spends much of its time and energy on site visits that can entail long trips with overnight stays in many cases. Many site visits generate a 0% return as they do not fit our criteria or are not suitable for our lenders.

What must I do at closing?

Don’t just glance over the paperwork, make sure you read and understand the entire loan document.

How do I get started?

You can get started by completing our loan request form & we’ll get back to you ASAP.

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