Costa Rica Home Equity Loans Guide
Costa Rica Home Equity Loans can provide access to large amounts of money and are easier to qualify for than other types of loans because you’re putting up your home as collateral, also known as a guarantee. We have access to many private investors and lenders that conventional banks do not. As a result, the private lenders we work with can provide competitive interest rates, closing fees, and financing options compared to traditional banks.
We aim to connect borrowers with investors who can help them with the financing they need. You should not have to jump through hoops to learn how to secure a loan for an investment property. We certainly aim to make it as simple as possible for people like you, who have worked hard and saved a long time to acquire the cash you need to realize your plans.
Have a look through the variety of types of loans we focus on:
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Use Your Home as a Guarantee (Collateral)
Do you own property in Costa Rica? Are you looking to leverage its value? A home equity loan might be the answer you’re looking for.
Luckily for you, obtaining a home equity loan with us is much easier than you might think, with far less hassle & obstacles than the conventional bank process. Using the equity you have built up in your home, a loan can help you achieve many financial goals.
Use a home equity loan to:
Open a Small Business
Renovations
College/Graduate School
New Vehicle
Dream Vacation
Weddings
And More!
Get a loan from $50,000 USD up to $1,000,000+ USD based on the equity in your property. You may qualify for a home equity loan that reaches up to 50% of your home’s value!
A typical loan of this type can be anywhere from 6 to 36 months. We look at all kinds of properties, both large & small. For example, if your home is worth $200,000 USD, you can get a loan of up to 50% or $100,000 USD minus the closing costs. In exchange, the lender will place a mortgage lien on the title until you repay the loan. You only have to pay the interest each month and the principal at the end of the term.
How Gap Equity Loans Can Help You
Many of our clients say that Gap Equity Loans have helped them meet their financial needs better than Costa Rican banks. In other words, we can be a better option than conventional banks. That is because we focus on the following factors:
Speed of Funding Loans
In most cases, our private lenders can close and fund a loan in about 7 – 10 business days. Compare that to the typical six months up to a year time frame with conventional banks, which slows the process for the borrowers. Now you can see why our clients – real estate developers, investors, businesses, and homeowners, choose us.
Flexibility Of Loan Terms
We work with our Private Lenders to structure the loan repayment and collateral (equity) release terms to benefit both parties mutually.
Approval of Loans
Sometimes conventional banks will deny loan requests due to a self-employed borrower, a short work history, lack of income history, etc. With us, you have a greater chance of getting a loan authorized, even if a bank previously denied you. We work with borrowers to get quick approvals on their loan requests. Our private lenders are typically willing to overlook these difficulties if the borrower can repay the loan and has adequate cash invested in the collateral property.
The advantages of our services are clear as day:
NO upfront fees
NO annoying forms
Competitive interest rates
Fees similar to bank’s
Top-notch experts
Our Terms:
According to The Global Economy, depending on the details of your project, our interest rates for loans in the range of 12% to 16% on construction projects are usually close to the traditional bank’s rate of 14.23%. We’ll give each proposal for financial support its own careful review.
Loan-to-Value Ratio (LTV) and Loan Amount
When applying for a home equity loan in Costa Rica, one of the critical factors to consider is the loan amount and Loan-to-Value ratio (LTV) offered by the lender. With GAP Equity Loans, borrowers can access up to 50% LTV of their property value, depending on eligibility criteria and other factors.
For example, if your property is valued at $100,000 USD, you can potentially access up to $50,000 USD in funds through a home equity loan with GAP Equity Loans. Just as a $1,000,000 USD property could potentially borrow up to $500,000 USD and so on.
It’s important to note that the loan amount and LTV ratio can vary depending on the lenders analysis, the property’s value anylsis from Grupo Gap, and other factors. Here you can find out loan to value (LTV) calculator: https://www.gapequityloans.com/en/loan-to-value-calculator/
Interest Rates and Term Duration
When considering a home equity loan in Costa Rica, it’s essential to understand the interest rates and term duration offered. GAP Equity Loans offers competitive interest rates, ranging from 12% to 16%, depending mainly on LTV, the loan amount, and various other factors.
Let’s clarify with an example: Imagine you secure a $50,000 USD home equity loan for a 3-year term against a property valued at $250,000 USD, with an annual interest rate of 12%. In this scenario, your monthly interest payment would be around $500 USD. However, if the loan is against a property valued at $120,000 USD and the interest rate increases to 15% due to the perceived higher risk by the lender, the monthly interest payment for the same $50,000 USD loan over 3 years would rise to approximately $625 USD. The increase in the interest rate reflects the lender’s need for a higher return to compensate for the additional risk associated with a larger loan relative to the property’s value.
We advise opting for a 1-year pre-payment penalty or interest guarantee with our lenders, ensuring that a minimum of one year’s interest is secured for them. This arrangement means that if you decide to settle the loan 10 months in, you would be responsible for covering just the remaining two months of interest.
Given this setup, we strongly suggest choosing a 3-year loan term whenever possible, even if you anticipate fulfilling your objectives—be it project completion or financial restructuring—within two years and repaying the loan early. The advantage here is the flexibility offered after the initial year, allowing you to pay off the loan at your convenience without being bound to the full term. It’s beneficial to have this additional buffer period, provided the lender is amenable. However, it’s important to note that lenders are not obligated to extend or renew your loan beyond the agreed term.
Therefore, it’s crucial to carefully consider the loan amount, repayment term, and interest rates when choosing a Costa Rican home equity loan. GAP Equity Loans provides transparent and competitive rates and terms to help borrowers make an informed decision.
Applying for a Costa Rica Home Equity Loan
The application process begins by applying here: https://www.gapequityloans.com/en/loan-request/
Or by WhatsApp on our business line at +506 4001-6413 or by clicking: https://wa.me/50640016413
For us to be able to start our due diligence and analysis on the private mortgage loan. Please answer these questions in order regarding the property that will be used as collateral:
- GPS location pin from Google or Waze
- Plano Catastro (if a company owns the property: 1. what is the name of the company, 2. who is involved, and 3. are they in Costa Rica)
- Only 10-15 of your best current horizontally shot (landscape) photos of the property
- Lot size m2 / Construction size m2
- Loan request amount in USD $
- Property to be used as collateral valued in USD $ (or recent purchase price)
- What will the loan funds be used for?
Detailed Gap Equity Loans process step-by-step
Gap Equity Loans has consolidated the following practices to bring quality, secure loans to private investors:
- Our system vets the loans initially with our Loan Request Form (pre-application);
- We check the National Registry for any legal issues or other liens on the property;
- We evaluate the exact location of the property;
- Our analyst researches comparables in the area to see if the loan request and valuation stated on the pre-application are reasonable;
- Once we establish the loan is good enough for consideration, we request the entire application;
- We verify that all the taxes are up to date, including HOA fees when applicable;
- Our consultants follow up to verify that the information is correct and establish the borrower’s ability to pay off the loan;
- We perform a site visit and take current, up-to-date photos;
- Our analyst then gives a final evaluation;
- We send the loan request out to the private lenders we work with and determine who will be funding the loan;
- We work with a borrower to make sure there is insurance on the property (if needed);
- Once a lender says “yes,” we generate a draft term sheet;
- We send it to the lawyer to verify and prepare the draft for the protocol book;
- We receive the documents and send them to the lender and borrower for review;
- The lender or borrower makes any minor tweaks or changes. Then, we sent a final draft of the term sheet to all parties;
- We coordinate the signing with the lender, borrower, lawyer, and often any other party who needs to be paid off (and their lawyer);
- We meet at an agreed-upon location to sign the protocol book. The lender distributes the funds by SINPE (local bank transfer) or certified checks;
- Now that the loan is in place, the lawyer should check the National Registry within 30 days to ensure the loan is recorded correctly.
We have a blog page dedicated to this process you can find here: https://www.gapequityloans.com/en/how-to-get-a-loan-in-costa-rica/
Example
To provide you with a clearer understanding of our private mortgage loan offerings, which are structured as interest-only loans, here’s an overview: Our loan terms typically range from 6 months to 3 years, featuring annual interest rates and closing costs that are competitive with conventional banking options in Costa Rica. We strive to secure your loan swiftly, aiming for a turnaround time of just 5 to 10 business days.
The interest rates proposed by our lenders are influenced by the loan-to-value (LTV) ratio, ensuring that more favorable rates are available for lower LTV ratios. For instance, leveraging a property valued at $300,000 USD to secure a $30,000 USD loan represents a 10% LTV, which typically qualifies for more advantageous interest rates. Our network of lenders is prepared to offer loans at a maximum LTV ratio of 50%, providing flexibility while maintaining competitive terms.
Conclusion
We help borrowers get access to needed cash fast. So, if you cannot obtain traditional financing, if the bank’s requirements are holding you back, look no further! Do you need a fast turnaround, a simple loan application process? You can count on us to provide you with private investors we work with for all your borrowing needs.
-Co-written by Lawsen Parker (Operations Manager) and Glenn Tellier (Founder of Grupo Gap)
“I was hesitant to invest with Gap Equity Loans at first, but boy am I glad I did. I’ve seen a great return on my loan.” -George
CLICK HERE TO FILL OUT A LOAN APPLICATION
Contact us now to learn more about getting a loan in Costa Rica here!
Frequently Asked Questions page – Click HERE
Learn the Loan Process step by step – Click HERE
To use our free Loan to Value Calculator – Click HERE
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