Financing – Loan Requirements

Financing and Loan Requirements in Costa Rica

Until about 15 years ago it was difficult for anyone to obtain financing here.
The only thing available was owner financing. Up to three years ago, nonresidents
were not allowed to take out home mortgages at Costa Rica banks.
That did not deter home sales. Instead, potential property owners would come
with ready cash or take out a second mortgage in their respective countries.

Now all of that has changed. Costa Ricans and foreigners may now
apply for loans from public and private banks (There has been a tightening
up of credit because of the financial crisis in the U.S. in 2009, but this should
change as countries emerge from the recession). However, foreigners need
to have a residency permit and/or a job to get a mortgage. Interest on the
loan and requirements may vary from bank to bank.

A well-kept secret is that foreigners may use pre-tax IRAs from the United
States to purchase property here (see the next section). This procedure is
perfectly legal. They can also take out a line of credit on the equity of their
home in the United States. I also know of some people who have obtained
financing in Costa Rica without being residents as long as their credit rating
was good in their home country.

Interest rates for mortgages (hipoteca) depend on the market and the
institution making the loan. In this section, I include samples of what banks
require to qualify and interest rates. Most lending institutions require a life
insurance policy to cover a loan.

Lehman Brothers Bank has agreed to finance mortgages for foreigners
hoping to call Costa Rica their new home.

Lehman is the first foreign bank to provide home financing to nonresidents.
The Delaware-based institution struck a deal with Stewart Title,
which has an office in San José, to facilitate the process on local soil. The
company is looking to expand its mortgage lending opportunities outside
of the United States, Stewart Title is a natural fit. However, the bank does
not mean for the deal to be exclusive.

Stewart Title alone works with seven local banks – ranging from private
institutions such as HSBC and Scotiabank to the state-controlled Banco
Nacional and Banco de Costa Rica – to help non-residents obtain mortgages.
In general, future clients can pick from six different amortization periods,
ranging from one- to 30-year, fixed-rate mortgages with 20 percent down on
the home purchase price. The mortgages will be secured with the property
through a lien filed with the National Registry of property.
Lehman will deal solely with U.S. citizens first, planning to expand its
operations with time.

When you look at the demographics of the baby boomer population,
I believe that there will be a lot of baby boomers looking for vacation (and
living) opportunities outside of the United States. Costa Rica has built a
very nice brand, and people are heading there.

A Sample of Requirements for Obtaining a Loan
Note: All of the data below is subject to change

Private Banks
HSBC
www.banex.co.cr
INTEREST RATES IN DOLLARS $8.5% revised
INTEREST RATES IN COLONES ¢25%
TERM 20 years
MINIMUM LOAN AMOUNT $30,000
MAXIMUM LOAN AMOUNT (% OF APPRAISAL VALUE) 80%
COMMISSION FEES Approximately 6% including legal fees, bank commission
and first month’s insurance.
WHO QUALIFIES Residents and non-residents who have lived in the
country for at least a year

BAC
www.bancosanjose.com
INTEREST RATES IN DOLLARS Prime rate or 8% minimum, revised
quarterly
INTEREST RATE IN COLONES Not available
TERM 15 years
MINIMUM LOAN AMOUNT $30,000
MAXIMUM LOAN AMOUNT (% OF APPRAISAL VALUE) 70%
$400,000 maximum
COMMISSION FEES Approximately 10%
WHO QUALIFIES Residents only

Scotiabank
www.scotiabank.com
INTEREST RATES IN DOLLARS From 7.25% for residents. From 8.25%
for non-residents.
INTEREST RATES IN COLONES 19.95% 1st year, options start at 22.5%
TERM Up to 30 years
MINIMUM LOAN AMOUNT None
MAXIMUM LOAN AMOUNT (% OF APPRAISAL VALUE) 75% for
living purposes
65% recreational or rental purposes
COMMISSION FEES From 5 to 10%

WHO QUALIFIES – Residents and foreigners/non-residents who must have
two types of ID (including passport), SSN, income tax statements from last
three quarters, last bank and credit card statements certification of ownership
of house, car, etc. Legalized by the Costarican Consulate or Embassy in US
(or Homeland)

Public Bank
Banco Nacional
www.bncr.fi.cr
INTEREST RATES IN DOLLARS $7,5% fixed first year, variable from 9%
minimum subsequent years (currently 9.25%)
INTEREST RATES IN COLONES ¢20% fixed first years, periodically
adjustable subsequent years (currently 24,5%)
TERM $Up to 20 years ¢Up to 30 years
MINIMUM LOAN AMOUNT $1MAXIMUM LOAN AMOUNT
(% OF APPRAISAL VALUE) $80 % / ¢ 90%
$200,000 maximum
COMMISSION FEES 2% Comission: appraisal fees (vary with amount);
various other fees
WHO QUALIFIES Residents Only

Banco de Costa Rica
www.bancobcr.com
INTEREST RATES $9,5% ¢23.5%
TERM 15 years
MINIMUM LOAN AMOUNT $40,000
MAXIMUM LOAN AMOUNT (% OF APPRAISAL VALUE) $70% / $80%
COMMISSION FEES Approximately 10%
WHO QUALIFIES Residents Only

Banco de Crédito Agrícola
www.bancocreditocr.com
INTEREST RATES In DOLLARS $9,5%
TERM 20 years
MINIMUM LOAN AMOUNT $30,000
MAXIMUM LOAN AMOUNT(% OF APPRAISAL VALUE) $75% / ¢80%
COMMISSION FEES Aproximmately 9%
WHO QUALIFIES Residents Only

Related Resources:

Cayman Real Estate & Vacation Rental Properties

Mexico real estate – Cancun, Playa del Carmen, Riviera Maya, Cancun

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