Unlock your property’s potential with home equity loans in Costa Rica
Key Advantages of Home Equity Loans in Costa Rica
Before diving into the details, let’s highlight the primary benefits that make home equity loans an attractive option for property owners in Costa Rica:
Fast Approval Process
Unlike traditional banks that may take months, private lenders can approve and fund loans in just 7-10 business days, giving you quick access to needed capital.
Flexible Loan Terms
Choose from loan terms ranging from 6 months to 3 years, with interest-only payment options that help manage cash flow while accessing substantial funding.
Competitive Rates
With interest rates typically ranging from 12% to 16%, private equity loans offer competitive financing compared to other lending options in Costa Rica, particularly for non-residents.
Ready to explore your loan options?
Contact GAP Equity Loans today to discuss your specific needs and see if you qualify.
Understanding Home Equity Loans in Costa Rica
Home equity loans allow property owners to borrow against the value they’ve built in their real estate. In Costa Rica, these loans provide access to substantial funding by using your property as collateral, making them easier to qualify for than unsecured loans.
What is Home Equity?
Home equity is the difference between your property’s current market value and any outstanding mortgages or liens. For example, if your Costa Rica property is worth $300,000 and you owe $100,000 on an existing mortgage, you have $200,000 in equity.
How Home Equity Loans Work in Costa Rica
With GAP Equity Loans, borrowers can access up to 50% of their property’s value. These loans are structured as interest-only loans, meaning you only pay the interest during the loan term and repay the principal at the end of the term or through refinancing.
“Home equity loans in Costa Rica provide access to large amounts of money and are easier to qualify for than other types of loans because you’re putting up your home as collateral.”
Loan Requirements & Application Process
Understanding what’s needed to qualify for a home equity loan in Costa Rica will help streamline your application process. Here are the key requirements and steps:
Essential Requirements
- Clean property title with no existing liens
- Property value assessment by GAP Equity Loans
- Proof of income or repayment ability
- Property insurance (if required by the lender)
- Valid identification (passport or residency card)
- Property’s Plano Catastro (survey plan)
Application Steps
- Complete the initial loan request form
- Provide property documentation (title, Plano Catastro)
- Submit current property photos
- Property evaluation by GAP Equity Loans
- Review and approval of loan terms
- Legal documentation preparation
- Loan closing and fund disbursement
Important: Properties outside the Greater Metropolitan Area (GAM) have a $500 USD site inspection fee to cover travel expenses for property evaluation.
The Greater Metropolitan Area (GAM) in Costa Rica
Common Uses for Home Equity Loans in Costa Rica
Property owners in Costa Rica leverage home equity loans for various purposes. Understanding these common uses can help you determine if this financing option aligns with your needs.
Home Renovations
Upgrade your property with improvements that increase its value and enhance your living experience.
Business Investment
Start or expand a business venture with the substantial capital available through equity financing.
Real Estate Investment
Purchase additional properties to expand your real estate portfolio and generate rental income.
Education Expenses
Fund higher education for yourself or family members with favorable loan terms.
Medical Expenses
Cover unexpected healthcare costs with flexible financing options.
Have a specific funding need?
GAP Equity Loans can help you determine if a home equity loan is the right solution.
Interest Rates & Fees for Home Equity Loans in Costa Rica
Understanding the costs associated with home equity loans helps you make informed financial decisions. Here’s a breakdown of typical rates and fees you can expect:
| Cost Component | Typical Range | Notes |
| Interest Rate | 12% – 16% per annum | Rates vary based on loan-to-value ratio, property location, and risk assessment |
| Closing Costs | Approximately 8% of the loan amount | Includes legal fees, property evaluation, and administrative expenses |
| Site Inspection Fee | $0 – $500 USD | Free within GAM; $500 for properties outside the Greater Metropolitan Area |
| Monthly Payments | Interest-only | Principal due at end of term; example: $100,000 loan at 12% = $1,000/month interest |
| Early Repayment | Typically, a 1-year minimum interest | Most loans require a minimum 1-year interest payment, even if repaid early |
Comparison of lending rates in Costa Rica (Private Lenders vs. Traditional Banks)
Loan-to-Value Calculator
The loan amount you can qualify for depends on your property’s value and the lender’s maximum loan-to-value (LTV) ratio, typically up to 50% with GAP Equity Loans.
Calculate your potential loan amount: If your property is valued at $300,000, you could potentially borrow up to $150,000 (50% LTV).
CLICK HERE to use our FREE Loan-to-Value calculator.
Critical Terms Explained: Understanding Equity Loan Terminology
Navigating the world of home equity loans in Costa Rica requires familiarity with key terms and concepts. Here’s a breakdown of essential terminology:
Loan-to-Value (LTV) Ratio
LTV is the loan amount divided by the property’s appraised value, expressed as a percentage. For example, a $100,000 loan on a $200,000 property represents a 50% LTV ratio. Lower LTV ratios typically qualify for better interest rates and terms.
Interest-Only Loans
With interest-only loans, your monthly payments cover only the interest charges, not the principal. The full loan amount (principal) is due at the end of the term. This structure provides lower monthly payments but requires planning for the eventual principal repayment.
Plano Catastro
This is the official survey plan for your property, registered with the National Registry of Costa Rica. It details the property’s boundaries, size, and location and is required for the loan application process.
Folio Real Number
The Folio Real is your property’s unique identification number in Costa Rica’s National Registry. It consists of three parts: province number, property number, and rights number (e.g., 6-123456-000). This number is essential for verifying property ownership and status.
Mortgage Lien
When you take out a home equity loan, the lender places a mortgage lien on your property title. This legal claim gives the lender the right to foreclose if you default on the loan. The lien is removed once the loan is fully repaid.
Important: Always verify your property’s status in the National Registry before applying for a loan. You can check this at http://www.rnpdigital.com/index.htm by searching your Folio Real number.
Foreclosure Risks & Renewal Tips
Understanding the potential risks and renewal options for home equity loans in Costa Rica helps you make informed decisions and protect your property investment.
Successful Loan Management
- Never miss monthly interest payments
- Communicate proactively with your lender
- Pay down principal by at least 10% when possible
- Maintain property insurance as required
- Plan ahead for principal repayment at term end
Foreclosure Risk Factors
- Missing monthly payments without communication
- Defaulting on the loan terms
- Neglecting property maintenance
- Failing to plan for principal repayment
- Not maintaining required insurance
What Happens in a Foreclosure?
If you default on your loan, the foreclosure process in Costa Rica typically takes 6-10 months. The property will go to auction, with proceeds covering the outstanding loan amount, missed payments, late fees, and legal costs. Any remaining funds would be returned to the borrower.
Loan Renewal Tips
When your loan term approaches its end, you have several options:
- Renew with the same lender – A Perfect payment history increases renewal chances (apply here Discuss Your Funding Needs)
- Find a new private lender – GAP Equity Loans can help connect you with alternatives
- Refinance with a traditional bank – May be possible if your financial situation has improved
- Sell the property – Use proceeds to repay the loan if other options aren’t viable
- Pay off the principal – If you have the funds available
How to Apply for a Home Equity Loan in Costa Rica
Ready to take the next step? Follow this straightforward process to apply for a home equity loan through GAP Equity Loans:
- Complete the initial loan request form with basic information about your property and loan needs
- Provide property documentation including GPS location, Plano Catastro, and property photos
- Participate in property evaluation conducted by GAP Equity Loans analysts
- Review loan terms and approval once a lender has been matched to your request
- Complete legal documentation with the assistance of attorneys
- Attend a loan closing where funds are disbursed and documents are signed
- Begin making monthly interest payments according to your loan agreement
Conclusion: Making the Most of Home Equity Loans in Costa Rica
Home equity loans provide a valuable financial tool for property owners in Costa Rica, offering access to substantial funding with competitive terms compared to traditional financing options. Whether you’re looking to renovate your property, invest in a business, or consolidate debt, leveraging your property’s equity can help you achieve your financial goals.
GAP Equity Loans specializes in connecting borrowers with private lenders who understand the unique aspects of the Costa Rican market. With faster approval times, flexible qualification criteria, and personalized service, private equity loans offer advantages that traditional banks often cannot match.
Remember that responsible borrowing is key to successfully using home equity loans. Always ensure you have a clear plan for using the funds and repaying the principal at the end of the term. By working with experienced professionals and understanding the terms of your loan, you can confidently leverage your property’s value while protecting your investment.
Ready to start your application?
Begin the process today and get access to the funds you need in as little as 7-10 business days.
Would you prefer to speak with a loan consultant directly?
Or contact via WhatsApp: Click Here
Questions about home equity loans in Costa Rica?
Our team is ready to help you navigate your options and find the right financing solution.
We have received many questions regarding Equity Loans. Below, you can find the most frequently asked Equity Loan FAQs.
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- What can I use a home equity loan for?
- What is private lending in Costa Rica, and what do they offer?
- What are the advantages of a home equity loan?
- What are the loan requirements?
- What does Gap Equity Loans do to secure loans?
- Do private lenders offer personal loans or auto loans?
- Do private lenders offer loans to purchase a property?
- Do you charge any up-front or hidden fees that I will have to pay before getting my loan?
- How much money can I borrow against my property?
- What are the minimum and maximum that I can borrow?
- How long can I borrow the money?
- Who lends me the money for my loan?
- What happens to my property title during the loan term?
- Why can’t I get a bank loan?
- What are the closing costs involved in a home equity loan?
- What kind of interest rate should I expect to pay?
- What is an Interest-Only Loan?
- If the loan is Interest Only, how do I pay it down?
- What does “Loan to Value” mean?
- How do you value my property?
- What is the purpose of a site inspection/property evaluation?
- Can private lenders put a second mortgage on my home?
- How long will a home equity loan take to close?
- What exactly do the consultant fees pay for?
- What must I do at closing?
- What if I am late on my payments?
- How do I renew my loan once the term is up?
- What happens in a foreclosure?
- Are you registered with SUGEF, the financial regulator in Costa Rica?
- How do I get started?
- What is a Property Plano?
- What is a Folio Real number?
- How can I check the status of my property?
- What is Home Equity?
- What is Home Collateral?
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What can I use a home equity loan for?
You can use a home equity loan for anything. Typical uses include home repairs or improvements, college for the kids, or buying an automobile. You can also use a home equity loan to pay for medical emergencies or buy another piece of property as a business investment.
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What is private lending in Costa Rica, and what do they offer?
Private investors in Costa Rica are individuals or companies that lend money to borrowers who may not qualify for a loan from a commercial bank with their red tape. They may be more willing to lend money to borrowers who have bad credit or who need a loan for a specific purpose, such as starting a business or buying a home.
Private investors may charge higher interest rates than commercial or private banks in some instances, but they also offer more flexible terms for your real estate financing than Costa Rican banks.
What are the advantages of a home equity loan?
The significant advantage of a home equity loan is a better interest rate. 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 per month. Home equity loans usually have a lower interest rate than personal loans and other types of non-secured debt. Monthly payments would be lower as well, as you are paying Interest only and not principal plus Interest.
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 using funds, and most importantly, how you plan to pay back the loan principal. Private lenders will generally loan up to 50% of the current real estate market value.
What does Gap Equity Loans do to secure loans?
Gap Equity Loans specializes in providing consulting services to potential borrowers looking for equity loans and knows how to secure a loan in Costa Rica.
Do private lenders offer personal loans or auto loans?
No. Private lenders do not offer personal loans, auto loans, or any loans other than equity loans secured by a mortgage on your property.
Do private lenders offer loans to purchase a property?
Yes, the lenders we work with can provide loans to purchase a property when they meet the exact requirements of a home equity loan. It will mean a down payment of more than 50% of the value assessed by Gap Equity Loans.
Do you charge any up-front or hidden fees that I will have to pay before getting my loan?
No, we never charge hidden fees. We charge only upfront fees when conducting a site inspection on properties outside the “GAM” (Greater Metropolitan Area). Properties outside of the “GAM” (Greater Metropolitan Area) incur a $500 USD fee for site inspection and in-house property evaluation, which covers all travel expenses.
How much money can I borrow against my property?
The private lenders we work with will lend up to 50% of the current market value of your property. However, a lesser amount is better. Private lenders offer a better interest rate when the LTV is less than 50% LTV
What are the minimum and maximum that I can borrow?
The minimum loan size with Gap Equity Loans’ private lenders is $50,000 USD, in the case of a simple consumer home equity loan. The maximum loan is in the millions, so don’t hesitate to contact us, and we can discuss the details if it is a large-scale project. The private lenders we work with will consider lending up to 50% of the current market value.
How long can I borrow the money?
That depends on the specific loan — your needs and the lender. Typical terms can range from as little as six months up to 3 years (some lenders will lend for as long as five years.) If you pay down the loan by roughly 10% or more and are never late with your payments, there is a good chance that you can continue with the same lender, or it would be easier for us to put in a new lender with a new term.
Who lends me the money for my loan?
We work with a pool of private investors and lenders that typically individually fund the loans. Generally, many of the lenders are retirees who downsized after selling their homes and are now making GAP investments. We have access to private investors and lenders that conventional banks do not. As a result, private investors can provide competitive rates and closing fees, and better financing options than conventional banks.
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 loan duration.
Why can’t I 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 specific collateral, income (locally earned, locally taxed), and residence requirements. If you don’t fit within their set parameters, it will be challenging to get a bank loan.
What are the closing costs involved in a home equity loan?
Closing costs and fees can include expenses for the following: attorney, appraisal, accounting, advisor (lender’s advisor and borrower’s advisor), reporting, mortgage cancellation, escrow, trust guaranty, and government fees. Also, stamps and loan repayment collections if needed. Just like regular bank mortgages, the closing cost is taken out of the funds disbursed to you. The closing costs are similar to bank fees and are approximately 8% of your loan amount.
What kind of interest rate should I expect to pay?
Typical equity loan interest rates charged to borrowers are from 12% to 16% per annum. However, every loan depends on the property’s location, risk, amount of collateral, and duration.
NOTE: Lower interest rates are for qualifying “lowest-risk” equity loans, with characteristics such as: under 30% Loan-to-Value, essentially guaranteed income (stock dividends, pensions, annuities), and a clear path to the 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 loan. At the end of the interest-only period, the borrower will need to pay off the loan principal.
If the loan is Interest Only, how do I pay it down?
Ask your lender if you may reduce the principal by 10% to 15%. We strongly advise doing this to enhance refinancing with a bank or with the private lenders we partner with during the loan term, if it is possible.
What does “Loan to Value” mean?
Loan-to-value (LTV) is a ratio obtained by dividing the Loan Amount by The Property’s Value. For example, if your property is worth $200,000 USD and you want to borrow $50,000 USD, 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 many years of experience in Costa Rican Real Estate, we can give an accurate assessment of your property. Typically, one of our analysts will inspect the property to determine the maximum amount a private lender can lend. On more significant properties, we may like to send out our appraiser.
Note: Properties outside the “GAM” (Greater Metropolitan Area) have a $500 US site inspection fee. This includes all beach areas, Arenal, Puerto Viejo, Monteverde, and Quepos.
What is the purpose of a site inspection/property evaluation?
If we are conducting a site inspection or property evaluation, it means that the loan appears to be in good standing so far.
The purpose of the site inspection is to:
Interview the borrower;
Assess the property.
Complete the loan application.
Take quality photos to present to private lenders via email, blog posts, and social media.
The appearance and cleanliness of your home or property are some of the factors in determining whether or not a lender will be interested in funding your loan.
To prepare for our site inspection, make sure your house is clean, clutter-free, and has freshly cut grass. (Remember: You only get one chance at a first impression!)
Additionally, we will address any questions you may have about the loan process.
There is no fee for site inspections within the Central Valley/ Greater Metropolitan Area (GAM).
Can private lenders put a second mortgage on my home?
No, the private lenders we work with 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.
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How long will a home equity loan take to close?
Every loan is different, but most of the loans are closed and funded by private lenders within a couple of weeks once you have provided all the requested information.
What exactly do the consultant fees pay for?
Most loans require a consultant for the lender and a consultant for the borrower, so all the consultants working on the loan will split the fees between them.
Then there are the office expenses, including advertising, website maintenance, salaries, internet costs, communications, and due diligence. Gap Equity Loans spends much of its time and energy on on-site visits that can entail long trips with overnight stays in many cases.
What must I do at closing?
Don’t just glance over the paperwork. Make sure you read and understand the entire loan document. The lender’s lawyer, by law, has to explain to you the exact wording of the legal document in English or Spanish before signing.
What if I am late on my payments?
The best way to handle a late payment is the following: CALL US BEFORE THE DUE DATE! Give us a heads up if you will be late. We can discuss why you are late, and perhaps we can help. We will then call the lender and explain that you will be late and why! It alleviates the knee-jerk reaction the lender will have if you don’t pay on time, and we have to call you to find out what happened.
How do I renew my loan once the term is up?
Once the term is up, you may be able to renew your loan easier if you are never a “day late or a dollar short.”
We say likely because circumstances change. The lender may choose not to renew because he would like his capital back for personal, medical, or other reasons.
However, never missing a payment or being short on the amount is worth its weight in Gold! Very easy for us to refer you to a new lender. We strongly suggest you pay down the loan by a minimum of 10% or more, so the loan amount does not increase.
Note:
Geopolitical situations may affect the renewal process, which is beyond anyone’s control. The global financial crisis, international conflicts, natural disasters, and pandemics are a few examples.
What happens in a foreclosure?
The foreclosure process can take between 6-10 months, depending on the location of the foreclosure. Upon foreclosure, the total amount owed (loan amount, all missed interest payments, late fees, and legal fees) is paid to the lender.
Note:
If the foreclosure process is started, the collateral property will go into an auction, and the highest bidder will obtain the property. The proceeds from the auction will be split proportionately between the private lender and the borrower (if applicable).
Are you registered with SUGEF, the financial regulator in Costa Rica?
No. SUGEF regulates banks and financial intermediaries, including investment funds that raise money from investors to place investments through their own company. At Gap Equity Loans, we provide consulting services to potential borrowers looking for equity loans. Gap Equity Loans is not an investment fund or financial intermediary.
How do I get started?
You can get started by completing our loan request form, or you can contact us by clicking HERE & we’ll get back to you ASAP.
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What is a Property Plano?
All recorded and titled property has a Plano Cadastro, also known as a Survey Plan.
It details the property’s boundaries, total size, ownership, Folio Real number, and registration date, among other information. Planos in Costa Rica can be found in the Registro Nacional (Public Registry) and the property’s municipality.
What is a Folio Real number?
All registered properties have a folio number (i.e., 6-123456-000). The first number represents the province where it is located, the second refers to the specific folio property number, and the third refers to the property rights, as in some owners (000 means only one owner).
How can I check the status of my property?
You can go to the National Registry: http://www.rnpdigital.com/index.htm, where anyone can check the status of a property.
Go to “Sistema de Certificaciones y Consultas Gratuitas” on the top left side of the webpage. A new tab will open, and then first-time users will need to navigate to “Registrarse por Primera Vez” located in the top left-hand portion of the page. After filling out the form, you will receive an email. Click on the link and enter your user email and password on the left-hand side under “Ingreso para Usuarios Registrados.” Then go to “Consultas Gratuitas” on the left-hand side, and next, you will see a list of all the types of “Consultas” you can do for “Bienes Immuebles” (Real Estate). To obtain a certified property report, click on “Consulta por Numera de Finca.” After this, you will need to enter the province number of the property, also known as “Provincia” (the first number in the Folio Real number on the Plano). Enter the folio number of the property (middle numbers of the Folio Real number on the Plano) and the number of the property to the right “derecho” (which is the last three digits of the Folio Real number on the Plano). Once you enter the said information, click on the “Consultar” (consult) button. A certificate with all the property information will appear on the screen.
What is Home Equity?
Home Equity is the difference between how much your home and your property combined are worth and how much you owe on your mortgage.
What is Home Collateral?
Home Collateral is a property that a borrower offers as a way for a lender to secure the loan.
To fill out a loan request – click HERE.
Loan Process step by step – click HERE.
If you are looking to invest – click HERE.
To use our free Loan to Value Calculator – click HERE.