Local banks in Costa Rica have gotten more aggressive in their lending. Most of them lend to foreigners even if you're not a resident. Terms have also become more reasonable with up to 80% LTV, an average of 7-9% interest rate depending on term lengths, which are typically 10-20years. The challenges are that the paperwork can be cumbersome and take months to process, and the lenders are still quite strict on debt-to-income requirements. That said, it is more possible than ever for foreigners to qualify for local bank loans.
Many sellers in Costa Rica are not burdened by a mortgage. Therefore, they have the advantage of offering seller financing. Typically most sellers will consider short-term financing of 1-2 years with a decent down payment. Costa Rica sellers have enough confidence in the registry system to hold a note and know it is a secure legal protection. So, even if a seller is not openly advertising with seller financing, many will not shy away from it, unless, of course, they have financial necessities for an all-cash deal. For a complete list of our properties offering seller financing CLICK HERE.
We work with private lenders who make loans on an individual basis. Clearly, private lenders will tend to be more flexible with terms and require far less paperwork. Incidentally, faster closings can happen when buying a home with private financing. Although each case will be taken individually, the benchmark private loan is usually 10% interest for 3 years, renewable, 2% initiation fee, and registered first mortgage or fide comiso (title held in escrow until loan is satisfied) only. Loan cannot be more than 60% Loan-To-Value (LTV). Our lenders will accept interest only or amortized loans. For a bullet point breakdown of the benchmarks, see below:
- Loan-to-Value: 50-60%
- Interest Rate: 10%
- Term: 3 Years
- Initiation: 2 points (2%)
- Registered first mortgage
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