In Costa Rica, when you buy a house or lot, or start the construction of your new home, you can opt for financial assistance such as mortgage loans. Mortgage loans allow you to access the necessary capital to purchase a property without having to worry about not having the exact money at the time of the transaction.
That is why, in this article about mortgage loans, you will learn about some factors that you should take into account before borrowing. Thanks to the help of our consultant Allan Ortiz, real estate consultant of Nativu Escazú, with extensive experience in mortgage loans.
What is a mortgage loan and where can you apply for one?
Mortgage loans are loans that a financial institution makes to buy, sell, or improve a property, using the property as collateral. If you default on the loan, the bank can take possession of the property.
In Costa Rica, you can apply for these loans from banks and public or private financial institutions. Each has different requirements and interest rates, so choose carefully.
Some entities that offer loans are Banco Nacional, Banco de Costa Rica and Banco Popular. You can also go to BAC Credomatic, Scotiabank, Davivienda or cooperatives such as CoopeAnde.
For every need, a loan
Also, each financial institution usually makes mortgage loans that are divided into 3 types, depending on the purpose for which the loan is requested. These are:
Loans for lot purchase:
Lots are undeveloped land that can be used to generate income or to construct a building. Generally, land loans have shorter terms, up to 15 years, but interest rates can be higher than for a home loan. If the land is used to build a house, the loan can be converted to a construction loan.
Loans for home purchase:
These are plans designed for the purchase of a house or apartment, usually requiring a down payment of 20%, depending on the value of the property to be purchased, and can have terms of up to 30 years.
Loans for Construction:
They are ideal for those who want to build their own home or make improvements to a property. With this type of loan, the money is disbursed in stages as the work progresses. They are usually supervised by an appraiser who reports on progress and compliance with the loan agreement. For this type of loan, it is necessary to present a construction schedule and budget.
What does the bank consider when granting me a loan?
Banks or financial institutions conduct rigorous studies to minimize risk when lending money. Among the data they are usually interested in are
- The ability to pay: this refers to the monthly income and the stability of the work that the applicant has; or, if it is the case, the amount of money saved.
- The down payment: This is the down payment, the amount of money that the applicant has available for this first payment, the higher the down payment, the better the conditions that the applicant will be able to obtain.
- The location and value of the property to be purchased: The bank will consider factors such as the location and age of the property.
- The type of property: this refers to whether it is an apartment, a house, a condominium, a plot of land or a detached house; some properties may even be rejected.
Comparative table of savings and request amount
When you apply for a mortgage loan and have an amount of money for the premium, the bank will calculate the amount it can give you. An example is shown in the table below:
| Ahorro disponible | Monto de préstamo | Cuota mensual | Taza de interés | Plazo de préstamo |
|---|---|---|---|---|
| ₡5,000,000 / $10,000 | ₡25,000,000 / $50,000 | ₡200,000 / $400 | 8% p.a. | 20 years |
| ₡10,000,000 / $20,000 | ₡50,000,000 / $100,000 | ₡400,000 / $800 | 7.5% p.a. | 20 years |
| ₡15,000,000 / $30,000 | ₡75,000,000 / $150,000 | ₡600,000 / $1,200 | 7% p.a. | 20 years |
| ₡20,000,000 / $40,000 | ₡100,000,000 / $200,000 | ₡800,000 / $1,600 | 6.5% p.a. | 20 years |
The importance of your credit history
The credit history records all of your credit, loans and installment payments, even those outside the bank where you will be applying for your mortgage loan. This history is the key to the approval of the loan, since it allows the bank to evaluate your behavior and commitment with the payment of installments.
The bank will recognize your behavior with late payments or the amount of active debt, so it is recommended that you keep your accounts up to date. And if you have already paid off a debt or installment, remember to request your “discharge” letter to avoid any setbacks.
These are some of the factors that advisor Allan Ortiz believes you should consider when applying for your mortgage loan; remember that these types of financial tools are key to buying a home, building or investing in real estate.
At Nativu, our local advisors and experts in real estate transactions will help you find or sell the home of your dreams. Do not hesitate to contact our advisors, and if you have any questions about mortgage loans and investing in Escazu, Santa Ana and Rohrmoser, do not hesitate to contact Allan Ortiz.
