Private Mortgage in Costa Rica: How It Works

A private mortgage in Costa Rica is a loan from a private lender, secured by a mortgage registered against titled real estate. The security works like a bank mortgage, but the lender, the review and the timeline are different. This guide explains who does what, how the loan is secured, how payments work and what to consider before you sign.

Who is involved

• The borrower owns, or is buying, the property and pays the loan fees.
• The lender provides the funds and holds the mortgage in first-lien position.
• GAP Equity Loans arranges the transaction through closing: it reviews the request, determines the property value used, with input and acceptance from the lender, and coordinates the documents.
• Attorneys and a notary prepare and formalize the loan documents and the mortgage.

How a private mortgage is secured

The mortgage is registered against the property in the National Registry, and GAP arranges standard loans only with the lender in first-lien position. If the property already has a mortgage or lien, it must be paid off before or at closing. GAP lends only against titled property, not against maritime-zone concessions.

The margin between the loan and the property value is the lender’s cushion. The standard maximum is 50% of the property value, and around 30% or less is preferred.

Terms and payments

• Loans from US$50,000, with additional paperwork and due diligence above US$1 million
• Terms from six months to three years
• Monthly interest-only payments made directly to the lender
• The full principal due at maturity
• An interest rate set for each loan during review
• Loans in US dollars

Interest-only payments can keep the regular outlay lower than principal-plus-interest payments, but they do not lower the total cost, and the principal still has to be repaid at the end.

Fees and early repayment

Borrowers pay the loan fees, including legal fees and GAP’s loan origination fee. The fees are deducted from the loan proceeds at closing, and there are no costs to pay before closing. Repaying before maturity carries a penalty, and its amount and conditions depend on the lender. Ask for both to be explained during the loan review, and have your own attorney read the documents.

After closing

You pay the lender directly each month. GAP’s main work ends at closing, but GAP can help with communication if a borrower or lender reports a problem. If payments are missed or the principal is not repaid at maturity, the lender can enforce the mortgage. See what happens in a foreclosure in Costa Rica and what late payments cost.

Private mortgage or bank mortgage?

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. A private mortgage through GAP requires no credit score, is open to borrowers of any nationality without Costa Rican residency, and GAP closes loans within 10 business days once the required documents are complete. If you qualify at a bank and have time, a bank mortgage may cost less and run longer.

Frequently Asked Questions

Where is a private mortgage in Costa Rica registered?

Against the property in Costa Rica’s National Registry, with the lender in first-lien position.

Can I use a private mortgage to buy a property?

Yes. Property-backed loans can finance a purchase as well as borrowing against property you already own, and nationality and residency do not restrict who can apply.

Who do I pay each month?

The lender, directly. Payments are monthly and interest-only.

Can I repay early?

Yes, but early repayment has a penalty whose amount and conditions depend on the lender.

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

Considering a private mortgage? WhatsApp us at +506 4001 6413 to get started, call start a loan request, review the loan requirements, or email info@gap.cr.

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