The real estate offer in Costa Rica is very wide, very varied and the range of prices is extensive, therefore, choosing the ideal real estate investment and a suitable home for your needs is not only possible, but it is only a matter of carrying out the right strategy.
But developing an appropriate strategy is not always easy, especially when buying a home for the first time, or, even if it is something that has been done before, when you are not a professional in the sector.
It is important to follow a method that helps you determine what your possibilities are and adapt them to the offer available in the market. In this way, it will be easier to complete a sale.
And, without a doubt, the most complex and the first step is to choose the real estate investment, that is, to determine the budget that will be available for the sale of the property. This, if the total amount of money is available, is simple, but in our country four out of five homes are bought with a mortgage. And in this case it is more complex to define your budget.
How to define a budget for the purchase of a home
As a general rule, banks do not recommend borrowing more than 35% of the income of the owner(s) who are going to acquire the home, although some allow up to 40%. So this factor will be decisive to establish the amount of the mortgage, but also others:
What will be the financing percentage of the mortgage?
80% financing
The most common is that banks finance a maximum of 80% of the cost of housing. In other words, the buyer must have savings of 20% of the purchase value of the home, plus the expenses generated by the sale (taxes, notary, etc.), which are usually around 10% of the value of the property.
100% financing
These types of mortgages are very rare, but some financial intermediaries or brokers can obtain them in particular circumstances. In addition, several banking entities do finance 100% of the home, when it comes from their own stock of real estate.
What type of mortgage to choose?
There are three options, and each one has its advantages and disadvantages.
Fixed
A fixed interest is established throughout the duration of the mortgage loan. This causes them to be safer for the borrower, since they know what the fee will be to pay throughout the life of the loan, but they are usually more expensive, around 2% per year.
Variable
The interest in this type of mortgage is established from a reference index, generally Euribor. This index varies depending on the situation of the European economic system. Therefore, the interest on these mortgages varies over time. To determine how the Euribor affects the interest on a loan, the bank usually establishes periodic reviews of the conditions.
These mortgages are cheaper, around 1% per year, but there is a greater risk that interest rates will skyrocket if economic conditions are adverse and the Euribor soars.
Mixed
The mixed ones are a combination of the aforementioned ones. They are generally fixed during the first decade and variable for the rest of the life of the loan.
The aforementioned are the most relevant factors when choosing a mortgage and defining the budget that will be available to buy a property, but there are also others, such as the insurance that must be contracted or the taxes that must be paid.
