Structured Real Estate Lending in Costa Rica: What Private Lenders Should Review

Structured real estate lending is not about making a quick decision based on a property photograph or a promised return. A private lender needs to understand the collateral, the borrower’s plan, the legal security, and how the loan is expected to be repaid before funds move.

For Costa Rica property-backed opportunities, the basic question is practical: is the property workable collateral today, and does the requested financing have a credible repayment and exit plan?

What structured lending means

A structured loan is built around the real facts of one file. The lender reviews the property, the requested amount, the purpose of the funds, the security position, the repayment plan, and the proposed closing structure. The terms are not produced by one automatic formula.

Loans presented through GAP are normally around 12% annually and can be higher depending on the individual loan. The rate, term, and structure depend on the full file, including the property, location, loan-to-value, borrower, purpose, repayment plan, and documentation. A lender decides whether a specific opportunity is suitable.

Terms generally range from six months to three years. Shorter terms make it important to understand how the loan is expected to be repaid at maturity, not simply how interest payments may be handled during the term.

Start with the collateral

A lender should not treat a stated property value as automatic. The review should consider whether the property is marketable, accessible, legally clear, and practical to hold or sell if the borrower does not perform as agreed.

That review can include:

• Title, ownership, and existing liens. The ownership structure and recorded obligations need to be understood before closing.
• Road access, location, condition, and marketability. A property can look attractive yet be difficult to access, use, finance, rent, or resell.
• Realistic property value and comparable support. Value should be supported by the real market, not only an asking price or an optimistic estimate.
• The loan amount and purpose. The size and use of the loan should make sense against the security and repayment plan.
• The repayment plan and exit strategy. The lender should understand the intended source of repayment and the realistic alternatives if that plan changes.

GAP uses first-lien security only. Existing mortgages do not automatically rule out a request, but a proper first-lien closing structure must be arranged before funds are released.

Rights of way, easements, utility rights, and neighboring-use issues are not automatically bad. They do need to be understood because they can affect access, use, value, and resale.

Loan-to-value needs to leave room for the real world

Loan-to-value is not one fixed number for every property. Stronger property-backed situations may sometimes support around 50% loan-to-value, depending on the full file. Lower loan-to-value requests, often around 30% to 40%, can be easier to structure when the property and file are strong.

The number must reflect realistic value, not a hoped-for future value. Completed, marketable homes can be more workable collateral because they may be usable or rentable if a lender needs to take the property back. Raw or vacant land needs a more careful review and is often treated more conservatively.

Closing structure matters as much as the property

A sound file explains how the lender will obtain the intended security before money moves. The borrower normally pays the legal fees and closing costs, which are usually addressed within the closing structure. If a prior mortgage or lien must be paid off to create first position, that payoff can also be addressed at closing when the structure supports it.

Closing documents and registration are handled through the appropriate closing attorney or notary. Before funding, the lender should understand what will be paid at closing, what existing security will be removed or addressed, and how the first-lien position is created.

Repayment at maturity and the next decision

The loan documents set out the payment and maturity terms. Principal is scheduled for repayment at maturity under the signed loan documents. If the lender is satisfied with the borrower, collateral, and current file, they may choose to continue with the same borrower. If not, GAP can present another opportunity for the lender to consider.

Neither path is automatic. Conditions can change, and every renewal, replacement opportunity, and new loan requires its own review.

What lenders should expect from the process

A clear file helps GAP and the lender understand whether a proposed loan is practical. It does not create an approval or require a lender to proceed. Once GAP has a complete file and due diligence is finished, qualified loans often close in about 10 business days, but timing depends on the specific property, legal work, documents, and closing structure.

Structured real estate lending works best when the lender can see the whole picture before making a decision: practical collateral, a proper first-lien structure, realistic value, a credible repayment plan, and a documented closing path.

To discuss a Costa Rica property-backed lending opportunity, contact GAP with the property details, requested amount, purpose, and proposed repayment plan.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)