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Private Mortgage Lending in Costa Rica

It’s critical to recognize that a foreigner’s prospects of obtaining a loan or mortgage from a bank in Costa Rica are little to none and next to zero if they aren’t already a permanent resident. Some private banks offer loans to foreigners, albeit they can be complicated and time-consuming. Unfortunately, if you’re above the age of 65, you’re likely to be turned down. Local banks have problems lawfully collecting and confirming your job history, credit, financial history, and other information as a foreigner. Due to this and the lengthy application process, bank financing is seldom recommended. This is why private mortgage lending in Costa Rica can save the day!


Anyone can benefit from private lender mortgages. They work in the same way as bank or credit union mortgages. The loan is secured by a physical piece of real estate that serves as collateral. Private lenders often charge between 10% and 18% interest. This, however, fluctuates based on the loan request’s parameters and the property’s worth. You can put the money toward a down payment on a property, a big purchase, a business venture, home upgrades, or various other things. You repay the money you borrowed in monthly installments with interest; this is how the lender makes money from the deal.


Are private lenders trustworthy?

It may sound too good to be true with options such as flexible payment periods, quick loan approvals, and reasonable rates. Still, a private lender provides the same level of security as a bank or other traditional lender. Private lenders handle financing with a more flexible and specialized approach. For instance, a private lender might be able to ignore past defects in your credit history and take into account much more current elements, such as your LTV (loan to value) ratio.


Are private lender’s considered loan sharks?

Professionals, known as “loan sharks” sell loans at exorbitant interest rates, ranging occasionally from 300% to 400% APR or Annual Percentage Rate. Many expenses are added on top of the high-interest rate, many of them concealed fees like an underwriting charge. All loan sharks could be considered private lenders, but not all private lenders are loan sharks. Loan sharking is not tolerated and is illegal as they often charge incredibly high and unfair interest rates with loose terms.


Should I use a family member as a private lender?

Lending money is lawful, and once you do it, the borrower has a legal duty to pay back the amount. If your borrower defaults on a lesser loan, you can sue them in small claims court to recover your losses. Although this may seem harsh, it’s crucial to comprehend it right away. This may be the quickest way to lose a great relationship. All circumstances are different, but it’s generally recommended to use a professional outside your family to separate these matters.


Why do private lenders charge 10%-18%?

Private lenders often charge between 10 and 18 percent of the loan amount, but this varies according to the loan’s objectives, terms, and the borrower-lender dynamic. Lenders are generally comfortable with these competitive rates compared to local banks unless they are a perfect Costa Rican citizen candidate with a spouse who has excellent credit as well to match. Things were looser before 2008, but many foreign developers fled following the recession, leaving a sour taste in the banks’ mouths.


Is there a penalty set for paying off early?

Lenders need to be protected the same as borrowers, which is why clauses are put in place to ensure an inevitable return on their money lending. For instance, imagine you want to borrow $200,000 USD from a lender, so the lender goes through the process and transfers it. After all this, you pay it back in just a few months, resulting in the lender making only a few thousand dollars. This wouldn’t be worth a lender’s time.


How do I get a private mortgage?

The good news is that Gap Equity Loans can put you in touch with private lenders that will lend to our clients without the following requirements:

  1.  An income requirement;

  2.  A credit score requirement;

  3.  A life insurance requirement;

  4.  A “perfect age” requirement.



Gap Equity loans could be your money loan solution! They have a long list of private investors who are always ready to look at new opportunities. Up to 45% of the property’s value may be borrowed from these private lenders. The greatest part is that these lenders may fund your loan in as little as 10 days, and the process is more straightforward than working with a traditional bank.



Complete our quick online Loan Request Form for a free evaluation now!



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