A Guide to Mortgages and Finance in Costa Rica

If you’re considering purchasing property in Costa Rica, you’ll want to know the financing options available. Mortgages or financing in Costa Rica can be more challenging than in the US or Europe, but you can easily navigate the process with the correct information. In this article, we’ll cover the basics of mortgages and financing in Costa Rica, including interest rates, availability, and appraisals.

Interest Rates and Availability

It’s important to note that mortgages in Costa Rica typically have higher interest rates than in the US. The availability of financing depends on your residency status and the bank you have in your accounts. Private lenders in Costa Rica tend to lend money out at around 12% to 18%

Tight Credit and Owner Financing

Credit in Costa Rica has tightened since the 2009 global financial crisis, but it’s expected to loosen up once the worldwide financial system stabilizes. While you wait for that to happen, you can explore other options for financing, such as short-term owner financing or using your retirement plans. Owner financing can be a viable alternative to traditional bank loans, with some sellers offering similar interest rates. You can also explore using your retirement plans, such as an IRA or 401k, to purchase your property in Costa Rica.

Hard Money Lending

Hard money lending from Gap Equity Loans is an option, but knowing risks are involved is important. This option is to borrow money from private lenders with a lot of cash and be willing to lend it to people who need it. Interest rates and closing costs are comparable to most Costa Rican banks. The terms for private money loans are shorter, usually from one to three years.

Appraisals

When applying for a mortgage in Costa Rica, each bank has its appraisers that they work with. Some banks require an appraisal before pre-approving a loan, while others send the appraiser after pre-approval. It’s important to note that appraisals in Costa Rica may not reflect the property’s actual market value, especially if the appraiser doesn’t factor in features that increase the property’s value. Therefore, getting pre-approved before starting your property search is wise to ensure you don’t waste time or effort.

Conclusion

Mortgages or financing in Costa Rica can be more challenging than in other countries, but you can easily navigate the process with the correct information and guidance. Whether you choose traditional bank financing, owner financing, or another option, it’s essential to understand the interest rates, availability, and appraisals involved. If you’re considering purchasing property in Costa Rica and want to explore your financing options, feel free to fill out the form below to connect with a private lender who can assist you in securing the funds you need.

Can foreigners get mortgages from banks in Costa Rica?

No, Costa Rica banks require clients to have permanent residency first.

What is the interest rate for mortgages in Costa Rica?

Interest rates for mortgages in Costa Rica are typically around12% to 18%

Are there alternative financing options for mortgages in Costa Rica?

Yes, Gap can help you find the perfect private lender for you.