Mortgages in Colombia

A common question we hear is, can foreigners obtain mortgages in Colombia ?  Generally the answer is no. It does not matter whether you are a wealthy pirate or you have a triple A credit rating in your home country, the answer is still no. Colombia, like most countries requires you to generate a credit rating before you can you be considered for any kind of loan.

In this case you have to ask yourself the question, which comes first, the chicken or the egg ? You can not get a loan in Colombia if you don’t have a credit rating, so how do you get one ?   The goal is not to pay cash for everything but you may have to be creative to get a credit rating. When you are finally able to get a bank account, the bank may offer you a credit card. If they don’t or won’t, you should offer to put a $5,000 USD deposit on the card, if that is feasible within your budget. At least some sum to draw off of until the central credit system begins to recognize your identity.

This will still not get you a mortgage.  If you have assets here, a well paying job or a Colombian spouse you might stand a better chance. Once you go through the application process and are approved you will find yourself paying between 10 % and 14 % interest. Yes, that is correct ! The banks are the big winners here right now but it does pay to shop around. A lot of expat chatter certainly points fingers at the banks being the pirates, or at least holding you to gun point but that is the reality of taking a loan in Colombia. Car loans are much more excessive !!

There are other alternatives. Mortgage a property back in your home country at a much more favourable rate. North American banks are often looking to ”give away credit” so you could consider a line of credit.

Generally the most common way for a foreigners to get a mortgages in Colombia is to find a seller who is willing to carry the loan. Actually this is not that common but not impossible. There are many creative ways to do this and we could examine them in detail but as these are private deals, your imagination is the limit. Keep in mind most sellers don’t want a term more than 5 years. Most are really interested in one or two years. The average interest rate is 7% to 9% and the down payment anywhere between 30% to 50%. As I have stated, these are generalizations.

If you want to register the mortgage and receive the deed immediately then you should note that this must be done in a notary’s office. As a result you will pay a registration fee in the neighbourhood of 3% of the registered value of the purchase. Some sellers prefer to keep the property in their name and will sign the property over – the escritura stage – only on final payment.

If you are fortunate enough to negotiate a sale over time, then make certain you have a rock solid contract that defines the payment terms, late payment penalties and all of the other important details.

For more information about mortgages in Colombia or assistance in buying a property through a mortgage or ”payment plan” contact us through the form below.