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If you are ready to take the final step of purchasing your dream property in Costa Rica, you are likely in the same situation as the majority of buyers in that your purchase will not be paid for in cash. You will need financing, and there have been many horror stories circulated in regards to securing a mortgage in another country.
As you’ll see below, there are rules and regulations of which you should be mindful, but if all of the necessary steps are taken, you should have no trouble securing the financing you need for a mortgage. Below is a brief look at some of those regulations that should be considered as you search for financing.
At the top level of regulation when it comes to financing your purchase is the Constitution of Costa Rica. Technically, Costa Rican law gives equal access to foreigners when it comes to the inherent right to purchase property. That equality extends to the securing of financing, but this is where the law and pragmatic reality tend to part ways a bit.
In practice, it tends to be a bit more difficult for foreigners to qualify for a mortgage through a Costa Rican financing company. While there is no stated technicality that makes this so, the fact is that lenders tend to be more leery of foreigners who want to borrow large sums of money. Generally, non-Costa Rican collateral and/or income is not considered by local lenders for many reasons. Therefore, if you want to secure local financing, it may require a co-signor, or ‘fiador’ in local parlance in order to obtain the loan.
Even if you qualify for a local loan, it’s quite common for foreigners to pay a high interest rate, which leads to the obvious conclusion that a loan from your home country may be more desirable for many reasons. You’ll need the necessary documentation to secure that loan, including plat descriptions and legal documents that assure your domestic lender of the soundness of your investment.
One additional detail to remember is that even if you secure financing, there are types of properties in Costa Rica that do not qualify for a mortgage to govern their terms. Beachfront property can be one example, as there are use restrictions imposed by the Costa Rican government, which technically owns a percentage of those plats ranging from the shore inland for a few hundred feet.
Additionally, even though almost all property plats are recorded with the Costa Rican government and/or local municipalities, not all are, and those ‘untitled’ lands are not eligible for a mortgage. However, this should not be relevant, as you could be taking a risk by purchasing property that is not on record with the authorities. Any lack of documentation should give you immediate pause and cause to reconsider the specific plat.
Otherwise, financing your purchase in Costa Rica works much the same as anywhere else. All you need to do is secure the help of a reputable local professional to make sure these steps are properly taken, and you’ll be on your way to owning that property in paradise you’ve been dreaming about for years. | |
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