Mortgages for Expats in Brazil

Author: Jim Newham
Submitted: June 2014

Although they are improving rapidly, credit instruments are still underdeveloped in Brazil. This is certainly the case for mortgages; until very recently, financing a home purchase was a rarity in Brazil. Mortgage restrictions are still tight on foreigners: unless you have permanent residence in Brazil, it will be exceedingly difficult to obtain a mortgage from a local lender. Whereas this may change in the near future, as it stands, if you do not have enough cash to buy the property outright, the only option as a non-resident is to take out a mortgage in your home country. Interest rates are likely to be higher in Brazil than your home country, so you should consider the matter carefully.

Even if you are a permanent resident in Brazil, you will need to prove that you are financially solvent before your application for a mortgage will be accepted. The main body offering mortgages to foreign permanent residents, the state-owned Caixa Econômica Federal (CEF), accounts for more than two-thirds of all mortgages in the country. Other local banks that may lend include Banco Itaú and Bradesco; the two main international lenders are HSBC and Santander.

Note that if you are considering buying off-plan, it is possible that the building company will offer to finance the purchase. While this will not be as gradual as a standard mortgage, repayment periods can be as long as five years. 

Requirements

Before your mortgage application will be considered, you will need a tax identity card and a Brazilian bank account. You may also need to provide proof of assets to the lender.

Terms

In general, the maximum loan-to-value ratio (LTV) for a Brazilian mortgage is 80% of the property value. This means that you will need to make a down payment of around 20%. In a restricted set of circumstances, CEF offer mortgages with an LTV of 100%, and other lenders may do so too. You will also need to prove to the lender that you have sufficient funds to cover this amount before proceeding.

Mortgage interest rates in Brazil have historically been high. The Banco Central do Brasil lowered the base rate to 7.25% in April 2013, but has since then raised the rate to 11% in an effort to curb inflation. Hence interest rates are once again higher than they are in many countries.

Mortgage types

There are not as many mortgage products available in Brazil as there are in some other countries, such as Anglo-Saxon ones. Fixed rate and variable rate mortgages are available, with the latter being more popular. However, it should be noted that some options, such as self-certified mortgages, are not available.

Application

In addition to the mortgage application form, the documents you need to apply for a mortgage typically include: