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How to Get a Loan for Property in Costa Rica

Posted by admin on February 18, 2014
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costarica-propertyCosta Rica is a beautiful place to live. Known for its sandy beaches with clear blue water and its year-round sunny weather, there is no better place to call home. If you’re thinking about living the dream and moving to gorgeous Costa Rica, you may be wondering how to go about it. Moving to Costa Rica isn’t as simple as buying a plane ticket; no, you have to apply for residency status and then you have to actually find a place to live. If you’re planning on buying property in the area, as many foreigners do, there are a few things you need to know upfront.

Financing Basics
Unless you’re rolling in money, chances are that you’re not going to be able to just plop down the cash for the home or condo you want, and that’s okay. As is common in the United States, the vast majority of people who buy property in Costa Rica do so by financing their purchase; in fact, getting financed for property in Costa Rica is quite similar to getting financed in the United States. You can take out a mortgage on the property you want to buy, and you generally have two options for doing so. You can either obtain a mortgage loan from a Costa Rican bank or you can go through an independent mortgage company. Be prepared for the entire process—from being approved for financing to actually closing the deal on your new home—to take a bit longer than it would in the states; things just move more slowly in casual Costa Rica. Obviously, you’ll need to have fairly good credit in order to qualify for a mortgage, and certain factors, like your income and your credit score, do play a part in determining your eligibility for financing and the amount that you can finance.

Securing Financing
As mentioned, your credit score and your income are both important factors in whether or not you get the loan you want or whether you qualify for a loan at all. While every lender is different, most Costa Rican lenders will generally only extend loans to those with a credit score of 650 or higher, and you can get a better loan rate with a better credit score. As for your income, you’ll usually need to prove that your mortgage payments will not cost more than around 30% of your income; if you can meet these two basic requirements, you could end up qualifying for a loan in an amount that covers as much as 80% of your property’s total cost. Unfortunately, though, when it comes to paying back the loan, you will likely find that interest rates are a bit higher (usually around 2% higher) than they are in the states; however, many people feel that the increased cost is a fair trade-off for living in lovely Costa Rica where the cost of living is much lower. Almost all of the mortgages secured in Costa Rica are adjustable during the first five years or so; fixed mortgages are extremely rare, so, no matter how good your credit, don’t expect to find a fixed mortgage rate.

Applying for Your Loan
Once you’ve done your research and have found a qualified and trustworthy lender, you’re ready to actually apply for your property loan. You can go through the application process from home or from inside of Costa Rica; neither option is “better,” so you should just choose the one that’s right for you. When applying for your loan from outside of Costa Rica, your lender will simply tell you what documents and other information he or she requires and will handle the rest. In most cases, applicants are simply asked to email scanned copies of forms and contracts or to send them via regular postal mail. If you choose to secure your loan from inside of Costa Rica, your lender should set you up with a mortgage broker to guide you through the process. With either choice, you’re obviously going to want to make sure that the person you are working with is able to communicate with you easily; most reputable Costa Rican lenders, however, will have English speaking staff to assist you.

Odds and Ends
As you can see, navigating the lending process in Costa Rica is fairly easy as long as you’ve done your part to find a reputable lender and as long as you have all necessary information on hand. A few of the things you will need as you embark on the lending process are your application, a letter of intent, a signed authorization form that allows your lender to run a credit check, income verification, copies of bank statements, proof of any investments or other assets you wish to be considered, certification that all property taxes are paid, a copy of your purchase agreement, and a copy of the property’s certified plans. If any additional documentation is needed, your lender will let you know, and hopefully, before you know it, you’ll be on your way to having a place to call home in beautiful Costa Rica.