If you’ve ever been to Ecuador, you know, as a new arrival often on a tourist visa it is almost impossible to so much as get a bank account open in Ecuador, let alone get approved for a home loan.
Once you have your residency visa and cedula (ID card) it is easy to open bank accounts, but getting approved for a mortgage still is difficult.
But there is a way.
I just got approved. And I as well am a new arrival expat (4 years ago) in Ecuador from the USA with no credit history in Ecuador.
Here’s what I would do to get approved as a foreigner…
1. Forget the big banks in Ecuador and focus on the credit unions or COOPERAS like JEP or Mutualista Pichincha. Open an account there and better yet leave a substantial CD of $20-30,000. 3-6 month term is fine. Both of the institutions listed above are insured on deposits up to $32k, I wouldn’t deposit much more than that.
2. Open an account as well and have any steady income you receive deposited directly there for a few months (preferibly at least 6).
3. Make friends with the banker at your nearest branch, maybe buy a few bank products from them, and maybe help them sign up a few other people, try to show them (albeit maybe not true) you are a “high-roller” type with cash and connections to boot although new to Ecuador.
4. On one of your bank visits while chatting up your new banker friend mention to her a great property deal you saw and that you were wondering on the possibility of a home loan. Chances are if you’ve built up rapport and shown that you have a little bit of money (by investing in a CD in their bank) or a steady income through monthly deposits they’ll ignore the regular requirements like showing tax statements of proof of Ecuador income or mandatory time in country and approve you for the instant loan. Your banker friend will often help push the application through her boss.
This is the exact albeit unsophisticated process I used to get approved for an up-to $70,000 home loan in Ecuador in 2017 with one of the above-mentioned institutions.
The next immediate step after you’ve been approved is they will send an appraiser to check out the property you are interested in, and from that will be able to loan up to 70% of the purchase price usually over a 10-15 year term. Oh yea, but did I mention mortgages aren’t cheap in Ecuador at 10.5% annual interest.
The challenge for me now is to find a property that can generate a POSITIVE CASH FLOW that puts money in my pocket each month above and beyond what I have to pay to the bank each month even at that expensive interest rate. Possible? You bet! Stay tuned.
Hasta pronto, if you liked this you’d love my Insider’s newsletter on living and investing in Ecuador,
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