Second Mortgage in Costa Rica: How It Works and Alternatives

A second mortgage in Costa Rica is a loan secured by a property that already has a mortgage, recorded behind the first one. It can seem like an easy way to reach the equity in a home without touching the existing loan, but second-position loans carry more risk for lenders and can be harder and more expensive to arrange. For many owners, replacing the existing mortgage with a single first-lien loan is the cleaner option.

This guide explains how second mortgages work, why GAP arranges first-lien loans only, and what the alternatives are. It is general information, not legal or financial advice.

What Is a Second Mortgage?

A second mortgage is recorded against a property after an existing mortgage. Because it sits behind the existing loan, the second lender takes on more risk if the property has to be sold or the loans enforced, and that extra risk is why second-position loans usually come with stricter terms. Ask your attorney how priority would work for your specific property.

Why Second Mortgages Can Be Hard to Arrange

• The second lender stands behind the first lender if something goes wrong.
• Less of the property’s value is left as a cushion.
• The terms of the existing mortgage may limit additional borrowing.
• Two loans mean two sets of payments, terms, and maturity dates to manage.

GAP’s Approach: First Lien Only

GAP Equity Loans does not arrange second-position standard loans. The lender must hold first-lien position, so any existing mortgage or lien is paid off before or at closing. In many cases, the new property-backed loan itself pays off the existing mortgage, and the remaining funds go to the borrower after loan fees are deducted.

For illustration only: if the value GAP determines for a property is US$500,000, a loan at 30% loan-to-value would be US$150,000. If US$60,000 is still owed on the existing mortgage, that balance is paid off at closing, and the borrower receives the rest minus the loan fees. Learn more about first-lien position in Costa Rica.

Refinancing vs. a Second Mortgage

• One loan instead of two: a single first-lien loan replaces the existing mortgage.
• Clear priority: the new lender holds first position.
• Different terms: GAP loans run from six months to three years with interest-only payments, so plan how the principal will be repaid.
• Check your current loan: your existing lender may charge an early payoff penalty.

Financing a Second Home in Costa Rica

Many people searching for a second mortgage are really looking for a way to buy a second home. If you already own titled property in Costa Rica, you may be able to borrow against it to help fund the purchase. GAP also reviews property-backed financing for purchases, for borrowers of any nationality, and Costa Rican residency is not required. 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. See our guide to ways to finance a house in Costa Rica.

Questions to Ask Before You Borrow

• What is the exact payoff amount on my existing mortgage, including any penalty?
• What will I receive after the payoff and loan fees?
• How and when will I repay the principal?
• What happens if a payment is late?

Frequently Asked Questions

Can I get a second mortgage in Costa Rica?

Second-position loans exist, but they carry more risk for lenders. GAP arranges first-lien loans only, which can pay off an existing mortgage at closing.

What happens to my existing mortgage with a GAP loan?

It must be paid off before or at closing so the new lender holds first-lien position.

Can I borrow against my home to buy a second home?

Yes, if the property qualifies. The amount depends on the property value GAP determines and the loan-to-value.

Do I need Costa Rican residency?

No. GAP reviews borrowers of any nationality.

How fast can a first-lien loan close?

GAP closes loans within 10 business days once the required documents are complete, including the payoff information for any existing mortgage.

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

WhatsApp us at +506 4001 6413 to get started, or call 855-562-6427 from the US or Canada.

Want to replace an existing mortgage or tap your equity? Start a loan request, see how it works, or email info@gap.cr.

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