As a former professional investment advisor with over twenty five years of experience, I can confirm that my international investment clients demanded a level of service that unfortunately does not exist in any Costa Rican bank – private or state – or in any investment firm that I know of…

I love this country and it’s people but unfortunately Costa Rica mortgage services and most areas of banking and financial services still need a great deal of improvement.

Having said that please note that I tend to hate banks everywhere, even the banks in my place of birth (Scotland) refused to open a new account for me a few years ago because I didn’t have a permanent address there.(??)

It may be a ‘cultural’ quirk but here’s what I have observed doing business with numerous banks in Costa Rica:

• The respect for the ‘time value’ of money is not the same.

  Sure all Costa Rican banks offer CD like time deposits but your ‘private banker’ probably doesn’t even earn $2,000 per month so it’s unlikely he or she has a meaningful amount of money invested and can not fully appreciate that “time is money.”

• The usual sense of urgency simply does not exist.

  When you want something done now! An order placed – now! It is rarely done “now!” Everybody is remarkably polite and friendly as the Ticos normally are but getting things done in an expeditious manner is not as easy as it should be.



• The bank’s mortgage officer in Costa Rica may tell you that sure! “You will qualify!”

  He is confident that you will be able to qualify for a mortgage but while he’s saying that, what he’s really thinking is:

  “There’s practically no way my bank is going to approve this Gringo for a mortgage but I have to look like I’m working and who knows? Maybe the bank policy will change during the next 3-6 months – and Elvis Presley will be found sitting in the corner of a bar in Jaco – which is the time it will take for us to eventually admit to him that you can’t get a mortgage in Costa Rica.”

It’s tough enough applying and receiving a mortgage in Costa Rica as a legal permanent resident, if you are an expat I wouldn’t even bother, you will be wasting your time!

Higher Fees Means Better Banking Service, Right?

I’m not actively involved in the management of client’s investments any more but when we evaluated offshore hedge funds for clients, on occasions we had to justify the fees charged by one fund in comparison with another.

When a hedge fund has higher fees than normal, we want to see superb management skills, preferably lower risk levels and a proven track record clearly showing that the performance is superior to the competition and to the comparable indices.

This “Superb management + Higher performance = Deservedly higher fees” equation absolutely does not apply when it comes to banking, investments and mortgages in Costa Rica.

In Costa Rica you will pay: “Much higher fees for atrocious communication skills, mountains of paperwork, MONTHS of waiting around waiting for a return phone call that’s never returned and interest rates which are twice as high as anything you’ll find in the U.S.”

Mortgage Commissions in Costa Rica Are About Double!

Take a look at Bankrate’s Closing Costs and you’ll see that “using a 20 percent down payment, with excellent credit,” the state of New Jersey has the highest average cost to close on a $200,000 mortgage in the United States ($2,094) which is about 1.04%

At 2-3% mortgage commissions Costa Rican are also twice as high and, banks will also charge you thousands for the legal and insurance costs.

These Mortgage Rates Below Are Special ONLY To The ExpoCasa – Costa Rica’s Home Exhibition

Although they are not listed in the graphic above, Banco General’s mortgage rates (80% LTV) appear to be the most favourable with a first year fixed rate of 6.5% with 2nd and 3rd year rates of 3 months LIBOR rate + 6.3% with a floor of 6.5%

For the fourth year onwards, 3 months LIBOR rate + 7.5% with a floor of 7.85%. Commissions are 2% except for pre-qualified projects where the commission is only 1.25%

Again, please remember that all these rates detailed here are special rates applicable ONLY during the Expocasa and, you must be a permanent, legal resident of Costa Rica with a cedula or the banks in Costa Rica will not talk to you about mortgages.

Mortgage Interest Rates in Costa Rica Are More Than Double!

Costa Rica banks are extremely conservative in their lending and be warned that you may also be asked to pay for extensive medical tests.

According to Bankrate.com as of 19th August 2015 the average 30 year mortgage in the U.S., carries a mortgage interest rate of 4.04%, while a 30 year US dollar mortgage rates in Costa Rica are currently 7.36% – 9.66% so it’s safe to say that ‘if’ you ever get a mortgage in Costa Rica you’ll be paying about double what you would pay in the U.S.

Still interested?

Please also remember that those high Costa Rica mortgage commission costs would be in addition to the fees charged by the attorneys for the actual closing of the transaction.

Costa Rica Mortgages. What’s the bottom line?

Having been through the mortgage process in Costa Rica a few times, I can assure you that it’s not a fun experience and as you can see with mortgage commissions of up to 3% and sky-high interest rates, it’s outrageously expensive.

I’m a legal, permanent resident who can show a monthly income that is probably in the top 1% of the population and I told my wife that I will NEVER go through the mortgage process again in Costa Rica.

We have clients who have successful – even well known businesses – in other well developed countries in Latin America who have shown banks here in Costa Rica audited financial statements showing $250,000+ per month in income and they have been turned down for mortgages to buy a fairly modest home of less than $500K.

One of our clients who earns even more than that was turned down for a loan to buy a car for $75K. Go figure!

If it’s at all possible, I would encourage you to…

Written by Scott Oliver, author of 1: How To Buy Costa Rica Real Estate Without Losing Your Camisa, 2: Costa Rica’s Guide To Making Money Offshore and 3. ¿Cómo Comprar Bienes Raíces en Costa Rica, Sin Perder Su Camisa?

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.