skip to Main Content
  • English
  • Español

Expert Guide: Private Mortgage Lending in Costa Rica

Here is a short video with the founder of Grupo Gap, answering some of the most frequently asked questions regarding how to reach your financial goals.



Understanding 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 65, you’re likely to be turned down. As a foreigner, it is hard for local banks to legally get your job history, credit history, financial history, and other information. 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 12% and 16% 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 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 valid with 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 can ignore past defects in your credit history and consider much more current elements, such as your LTV (loan-to-value) ratio.



What’s an LTV?

The amount of money you wish to borrow about the value of the house you’re buying or borrowing against is known as the Loan-To-Value ratio or LTV. The LTV is a crucial aspect of the deal that our analysts must consider while evaluating your loan request and performing the due diligence phase. With a maximum LTV ratio of 45% for gap equity loans, you can borrow up to $225,000 USD on a property worth $500,000 USD. For our LTV calculator, click here.



Are Private Lenders Sharks?

All loan sharks could be considered private lenders, but not all private lenders are loan sharks. Loan sharks offer exorbitant interest rates, occasionally ranging from 300% to 400% APR or Annual Percentage Rate. Additional expenses, sometimes unexpected and without notice, can be added to the high-interest rate without rhyme or reason. Gap Equity Loans does not condone nor tolerate loan sharking. They refuse to work with any private lenders that want to operate in that manner as it is illegal and immoral as they often charge incredibly high and unfair interest rates with loose unforgiving terms.



Should I use a Family Member as a Private Lender?

Lending money can be a lawful act, and once the loan contract is signed and submitted, 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 immediately. This may be the quickest way to lose a great relationship. All circumstances are different, but using a professional outside your family is generally recommended to separate these matters.



Why do Private Lenders Charge 12% to 18%?

The Global Economy reports that the average interest rate on a bank loan was 14.23% from December 2001 to December 2022, making private interest rates comparable to those of conventional mortgages. Private lenders often charge between 12% and 18% of the loan amount, which 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.



Are there Penalties for Paying Off a Loan Early?

Lenders need to be protected like borrowers, so clauses could be implemented 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, making the lender make only a few thousand dollars. This wouldn’t be worth a lender’s time.



How do I get a Mortgage?

The banks in Costa Rica will often ask for a significant down payment, two years’ worth of tax returns from the same job you’re now in, a ton of paperwork, and sometimes even an appraisal you have to pay for. Once you have completed all the required documentation, it can typically take several months to a year or even more to close or be rejected.

These are just a few reasons we suggest applying for a private loan and filling out our online loan request form! 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.

What are the Risks Associated with Home Equity Loans?

The most crucial concern associated with a home equity loan is that, like with any financial institution, you could lose your property if you cannot repay the loan. The lender can foreclose on your home if you fall behind on payments since your property is collateral to secure these contracts.



Is a Private Loan Worth It?

You may be able to get the money you want through a home equity loan to grow your company to a new level. Compared to the regional Costa Rican banks, a home equity loan may provide competitive rates without any upfront or unforeseen costs. You may avoid the drawn-out waiting period, a ton of paperwork, and the hurdles that the regional banks make you clear to deny you after six months or more.




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 best 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.

-Written by Glenn Tellier (Founder of Grupo Gap)



*Loan Request Form

    Your Information

    How Did You Hear About Us?


    Referral Name:

    Your Name:

    Your Email Address:

    Your Phone (if possible, include both home and mobile numbers)

    Loan Request

    Amount Requested:


    Use of Funds:

    Collateral Property Details

    Property Location: Please include Province, Town, and District

    Approx. Land Area: (pick square meters or square feet)

    Approx. Construction Area M2: (pick square meters or square feet)

    Property Value:


    Property Description: Please include the age and condition of the property

    What is/are your Land Survey (plano catastrado) or Lot number(s)? (optional)



    Frequently Asked Questions

    What is private mortgage lending?

    Private mortgage lending is an alternative form of lending where borrowers can get financing from private individuals or companies, rather than traditional financial institutions.

    What are the benefits of private mortgage lending in Costa Rica?

    Private mortgage lending in Costa Rica offers more flexible lending terms, customization of loans to meet specific needs, and can provide financing options that may not be available through traditional lending institutions.

    Is private mortgage lending in Costa Rica more expensive than traditional lending options?

    Private mortgage lending in Costa Rica are comparable in terms of interest rates and down payment requirements.

    What is the interest rate for private mortgage lending in Costa Rica?

    Interest rates for private mortgage lending in Costa Rica typically range from 12% to 16%.

    Can individuals with bad credit or employment history still qualify for private mortgage lending in Costa Rica?

    Private mortgage lending in Costa Rica can be a viable option for individuals who may not be able to secure a loan from a traditional financial institution due to various factors such as credit score, income, or employment history.

    Are there any risks associated with private mortgage lending in Costa Rica?

    As with any form of lending, there are risks associated with private mortgage lending in Costa Rica. Borrowers should be aware of the risks and do their due diligence before entering into any lending agreement.

    How can I find private mortgage lenders in Costa Rica?

    Private mortgage lenders in Costa Rica can be found through online searches or by contacting a financial advisor who specializes in private mortgage lending.


    “Well, I’ll be honest, I wasn’t sure what to expect with gap equity loans, but I’m glad I took the leap. The team explained everything well, and the returns have been impressive. I’d do it again.” – Vito.


     Contact us for more information, or fill out a loan request now!




    Need Residency status in Costa Rica? – Click HERE.
    Looking for Real Estate? – Click HERE.
    Want to invest? – Click HERE.

    Back To Top