The Buying Process
Financing
Banks
Costa Rica's banking structure is comprised of the central bank; three state-owned banks, which is responsible for almost half of total banking assets of Costa Rica, a state-owned mortgage bank, sixteen commercial banks, eleven private finance groups, four mutual house-building companies and 27 savings and loans cooperatives. In addition, there are more than thirty investments, retirement funds and trusts run by both state, private commercial banks and the state-run insurance company.
When selecting a bank for purchasing Costa Rican real estate, consider personal convenience and the payment schedule your two most important factors. Mortgages and fees can vary greatly from bank to bank.
State run banks are backed and supported by the Costa Rican government and more risk averse. They are conveniently located in every town and almost every city in Costa Rica. Unfortunately these banks usually have long lines and bilingual staff is often not available.
Private banks typically provide quicker and more personalized service, shorter lines and English speaking personnel. They do offer fewer branches so it may be less convenient to utilize them. For a big purchase like real estate, it may be your bank type of choice even though you would open a checking account at a more accessible state-run bank. For foreign buyers, most all of the private banks are associated with banks outside the country which enables easy and quick money transfers.
Mortgage terms, bank by bank:
Banco San Jose offers 15 to 20 year mortgages from 25K to 500K. They offer financing up to 80% of the total real estate purchase price for loans of 150K or less and 70% from 150K to 300K. Loans over 300K are available at 60%. For home improvements, renovations and additions, financing is available at 70% for loans of 30K to 400K at rates of 5.25% over the three month Libor rate with a maximum of 7.5%.
Scotiabank gives loans in dollars and in the colon with 10-30 year loan terms. They offer very flexible terms allowing for financing of up to 90% of the total value of the property and an option for mixing currencies. For colones interest rates are about 20% to 22% and 7% to 10% in U.S. dollars. Rates vary with credit and the length of the term of the loan. Bank fees and processing chargers account for roughly 7.5% in U.S. dollars.
Banex has similar terms to the ScotiaMix which allows for a loan to combine colones and dollars. For dollars, the mortgage credit interest rate is based on Libor plus 6% for terms of up to 30 years. Bank charges are roughly 6%.
HSBC and Citicorp have been acquiring and assimilating banks across Costa Rica. They offer similar real estate mortgage terms to those laid out above. They are constantly changing and these will be close to the current rates, but are not perfect. The rates offered by HSBC and Citicorp should be competitive with the banks listed above.
