Cash-Out Refinance in Costa Rica: Turning Equity Into Cash

If you owe less on your property than it is worth, a cash-out refinance in Costa Rica lets you replace the existing loan with a new, larger one and receive the difference in cash. With GAP Equity Loans, the new loan is a private, property-backed loan in first-lien position. This guide explains how the payoff works, how much cash you might receive and what to check before you commit.

How a cash-out refinance works

At closing, part of the new loan pays off your current mortgage or lien, and the new lender’s mortgage is registered in first position. The loan fees are deducted, and the balance is paid to you. From then on, you make monthly interest-only payments to the new lender, and the principal is due at maturity, six months to three years later.

GAP lends only in first-lien position, so the old debt must be cleared before or at closing. A second mortgage behind an existing loan is not an option for GAP’s standard loans.

How much cash you could receive

Start with the loan amount. The standard maximum is 50% of the property value GAP determines, with input and acceptance from the lender, and around 30% or less is preferred. Loans start at US$50,000, with additional paperwork and due diligence above US$1 million.

Then subtract what comes out at closing. Ask GAP for your exact figures before you commit, so you know how much cash you will receive. The fees in that example are not a fixed percentage. The actual amounts depend on the loan and are explained before you sign.

What a cash-out refinance costs

• Interest. The rate is set for each loan during review.
• Loan fees. Legal fees and GAP’s loan origination fee are paid by the borrower and deducted at closing. There are no costs to pay before closing.
• Early repayment. Repaying early carries a penalty; the amount and conditions depend on the lender.
• Your current loan. Ask your existing lender whether it charges anything to pay off early.

Is a cash-out refinance right for you?

It can make sense when the cash has a clear purpose and the principal has a clear source of repayment within the term: finishing a project before a sale, funding a business need or bridging to incoming capital. It makes less sense for long-term spending with no exit, because a loan of six months to three years has to be repaid or refinanced at maturity.

Compare it with the alternatives, too. If you qualify at a bank and have time, a bank refinance may cost less. Banks set their own requirements, which can make bank loans harder for newcomers, and bank loans can take many months, if not longer, to close.

The process with GAP

1. Send a loan request with the property details, your current loan balance, the cash you need and your repayment plan.
2. GAP reviews the title, existing liens and the property value.
3. You receive the proposed terms and provide the required documents, including the payoff details for your current loan.
4. At closing, the old loan is paid off, the new mortgage is registered and the balance is disbursed.

GAP closes loans within 10 business days once the required documents are complete. Borrowers of any nationality can apply, Costa Rican residency is not required, and no credit score is required.

Frequently Asked Questions

Can I do a cash-out refinance in Costa Rica if my property has a bank mortgage?

Yes, if the new loan can pay off the bank mortgage at closing and still fit within the loan-to-value limits.

Can I keep my current loan and add a second one?

Not with GAP’s standard loans. The lender must hold first position, so the existing loan is paid off before or at closing.

How are payments made after closing?

Monthly and interest-only, paid directly to the new lender, with the principal due at maturity.

What happens at maturity?

The principal is due in full. Plan the sale, refinance or other source of repayment before you sign.

This article is general information only and is not legal, financial, or tax advice. Every loan depends on property review, documentation, and lender approval.

Thinking about refinancing? WhatsApp us at +506 4001 6413 to get started, call start a loan request, read about home refinancing in Costa Rica, or email info@gap.cr.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)