In recent months, the supply of mortgage loans has grown in Costa Rica, where they lend you 100% of the property’s value. Even the entities that do not finance the total value, often grant the client a personal credit for the payment of the premium.
It is an option that carries its risks, including the possible impact on the monthly payment of an increase in interest rates or the exchange rate, since the debtor’s exposure is high, compared to a conventional mortgage.
Likewise, the fixed rate time is normally shorter, so it must be taken into account that a large part of the term would be variable rate, while the rates are higher than those of a mortgage loan that is given a premium.
A benefit for some potential clients
On the other hand, it is a form of financing that brings benefits for many consumers. An advantage of this type of loan is that it allows someone with adequate cash flow to buy a house or apartment, even if they do not have enough capital for the premium. Likewise, a person can become the owner of a house or an apartment, without waiting up to several years.
It would also be possible for an investor to generate an income stream, by leasing the homes acquired through mortgages of 100% of the value to third parties, without tying up their own capital.
Financial entities also often impose additional conditions on this type of loan, especially by ensuring that the client has an adequate income to meet their obligations. Several developers for their part grant the loan of 100% of the value, but demand the payment of the premium in tracts.
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Growing preferred choice
The 100% home equity loan option is not for everyone; however, it represents an opportunity for several buyers to become owners of their own home, without waiting several years. Many realtors are able together to design an attractive proposal for all those interested in exclusive projects, in which financing of up to 104% is contemplated for those clients who sign a contract.
Likewise, some banks have made alliances with developers, prequalifying projects, selecting residences that allow greater agility in the approval of the credit as well as having the assurance that it has been previously verified that the given project has all the permits. In this way offering clients very competitive conditions, which allow them to have greater stability and control of their finances, with a wide offer thinking about all market niches, and attractive financing percentages that make it easier for clients to achieve their goals.
Many different options available
Among the options is providing a collateral guarantee. Another mechanism is the complementary personal credit, which requires a guarantor, but having the purchase of a house, lot and/or construction, the remaining amount can be financed with this product, without requiring the figure of the guarantor, the above in accordance with the income of the family nucleus allowing both loans to be made.
Each entity can define and assume a risk position of what it considers to be the percentage it finances, and on this it evaluates payment capacity and guarantees and as such if the client complies with the variables, it proceeds. This position is respected.
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Savings option
On the subject of savings, whether or not a person performs this action does not define whether he or she is a good or bad payer, what it does show, among other aspects, is that the client has discipline to manage their money flow.
Normally, people are not able to fully face the financial commitment that this represents in their budget and on many occasions, they do not have the savings to provide the necessary premium. For this reason, there are offers of different credit options, like promoting as part of the savings culture that people can open a programmed savings plan, where for a certain time and, according to economic possibilities, the person saves to obtain the premium and later the credit option is facilitated for acquiring the property.
Although it is true it is a common market practice some experts in the field do not encourage or promote 100% financing, but rather encourage savings as a tool to obtain the premium for this type of investment.
TCRN Staff
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