Chile Forum

I would be interested what anyone could tell me about getting a mortgage in Chile. Especially any stories about differences you might find in the south (Coyhaique). Any comments about the price of homes and the relation to the cost of building would be most interesting to me. I have been acquainted with Chile for more than 20 years, but sometimes I think that only confuses me, since 20 years ago you could buy 1000 acres for less than $40,000usd. The same today is over $500,000usd. I understand all the issues of quality of construction. I have tools and would be my own builder, but need to buy a home now and build later. Comments on renting issues would be interesting to me. I'm also interested in comments about prospects for gringo builders and how they might get on in business in the Chilean market. As well as information on non-retired (need to work) expats and how they might best survive in Chile. Thanks

I wish I could help you, however by bumping this question someone may have an answer for you. Probably Patagoniax may be able to give it a shot at it.He lives waaaaaayyyyyyyy south,where the penguins meet.... I live in Valdivia therefore my limited knowledge stops right there.It would be interesting to know about the mortgage part and the rest....(some of these "gringos" know a lot more than this chilean newly "integrated" to the chilean ways. ) So I'll step aside hoping to learn more.

yea, the answer is short. You can't get one. Now the longer answer. You can get one, but....

You need to have a bank account (i.e. checking account, not savings account).
You have to be a full resident to get an account (i.e. about 1.5 years to get that more or less ).
You got to have a job inside the country (i.e. you need established regular tax declarations).
and so on and so forth.

Think about 3-5 years of living and working in the country before you are even in the game as far as the banks are concerned.

Now, before we get a bunch of "but my friend of a friend got one" or other silliness, I am here talking about mortgages to foreigners in general. Yes, there are expat gringos that have managed to swing a mortgage from time to time, but they have very specific circumstances. They are the exception to the exception to the rule. I would bet almost all of them did not just jump off the plane and go to the bank. I just don't want to get a bunch of calls from people with some sort of false hope that any foreigner that moves to Chile is instantly eligible for a mortgage. For 99.9% of foreigners, until you are well established in the country (you will know it when it happens), there is no chance at all of getting a mortgage

There are the possibilities of getting private mortgages from sellers, sometimes, for foreigners. Those are however normally very short-term deals, just to get the transaction done. Say a seller accepts a mortgage for 6-12 months while you get your money sent in to the country. That is a very very specific deal by deal basis. Most sellers want their cash immediately.

So I'm one of the lucky foreigners that has been approved for a mortgage (Santander). My problem is trying to work out how much they will lend me. My executive will never give a direct answer. I always get the same response "Submit a proposal and we'll find out if it gets accepted or rejected". So I get I could put in a bunch of proposals to see where the threshold is (it takes days/weeks to get an answer), but I'd prefer to have an idea so I know what type of house I should be looking at. I'm used to being told something like we'll give you 4 times your gross salary or something like that. Does anybody have any experience with this type of thing? Advice?

ingrambr wrote:So I'm one of the lucky foreigners that has been approved for a mortgage (Santander). My problem is trying to work out how much they will lend me. My executive will never give a direct answer. I always get the same response "Submit a proposal and we'll find out if it gets accepted or rejected". So I get I could put in a bunch of proposals to see where the threshold is (it takes days/weeks to get an answer), but I'd prefer to have an idea so I know what type of house I should be looking at. I'm used to being told something like we'll give you 4 times your gross salary or something like that. Does anybody have any experience with this type of thing? Advice?

sounds chilean, he is below the pay grade to authorise the amount and as per the chilean rule of customer service, there is none

good luck!


p.s would be interested to know the outcome!

The property you want to buy will be appraised by the bank, and they will normally not give you anymore than 80% of the appraised value. Obviously, there is a component of your income.

Also, there is big difference between being offered a mortgage and getting a mortgage. The sales departments at companies in Chile can seriously get ahead of the rest of the company.

Gloria wrote:... Patagoniax may be able to give it a shot at it.He lives waaaaaayyyyyyyy south,where the penguins meet...

Fortunately admin and others stepped in. I deal only in cash and spec house building. Years ago, before I could get a checking account (cuenta corriente) I moved large amounts into dollar account in Fondos Mutuos for which (at the time) I did not need to be a permanent resident. Then everything was done in cash and covered with receipts.

People who have never lived in the patagonia are not going to appreciate some of these comments...

... I have tools and would be my own builder, but need to buy a home now and build later....

Rent now, build when you can later. If you acquire some land and have access to utilities or provide your own diesel generator on-site and don't mind roughing it a bit, consider a temporary mediagua/galpón whilst you build the real thing. You and a decent crew can put up a mediagua in 4 days, or a week if you put the posts in concrete. In the Patagonia people are using surplus 40-foot Chinese steel shipping containers for everything from offices to makeshift dwellings to... more importantly, secure storage for tools and building supplies.

...in the south (Coyhaique). Any comments about the price of homes and the relation to the cost of building....

Previously discussed on various threads. Quality building in the Patagonia is expensive and rare. Fortunately if you build in a rural zone you often don't need to ask anyone unless there is a Plan Regulador in effect that calls for permitting. Think Alaska/Yukon circa 1949. I have never pulled a permit for anything except gas and electric.

Chilean patagonian maestros are generally backward and irresponsible chilotes, or otherwise shit builders. Good builders are typically from out of region and might have German or Croatian last names. Argentine patagonian building standards and practices generally superior. Cost of tools and materials 50-100 percent more than what you'd pay in Lower 48 and quality often low. Coihaique now has a sodimac and there are lumber mills for dimensional lumber, mostly roughcut, some milled and kiln-dried. Plywood expensive. Labor neither cheap nor good. Services such as good washed sand/aggregate for concrete are iffy. Decent diesel generators and contracting for resupply to remote site are in the cards around Coihaique area. I have work done by small -term (less than 2 weeks) task order and require/specify that trades guys provide their own safety and other coverages. Nobody gets paid til the job is done - no "adelantos" - and there is no promise that anybody is going to be selected for the next task order. That way nobody is "fired" - just isn't selected for follow-on. Fixed-price task order help ensure that nobody screws around.

Go ahead, try to find wire nuts in the patagonia.

Never store more than a litre of gasoline in an approved Chilean-made bidón for more than 2 weeks.

Anything not chained to bedrock or an immobile object weighing more than 1000 kg will be stolen immediately. If it is chained, it will also be stolen but it will take a few more minutes.

Count your nails and don't issue large packs. Workers tend to steal what they can, and there are little hardware shops that fence stolen construction materials. Welcome to Chile.

...gringo builders ... in business in the Chilean market... information on non-retired (need to work) expats and how they might best survive in Chile....

Don't expect to make any money by being a North American builder in Chile. Bring the best tools you can. Bring your best Stihl chainsaws. You can actually get some parts and service for Stihls in parts of the patagonia, a region where a good chainsaw is more important than indoor plumbing. Bring best over-19-volt cordless tools you can afford and a shitload of batteries and chargers that you can make work on 220 vac power. Milwaukee makes cordless chargers that run on 220 vac and available on special order. I use cheaper Craftsman cordless and run chargers on 12 vdc vehicle power and through 220/110 industrial transformers. Never let anyone borrow your cordless tools, of course. For rural work in Aysen, buy the best 4x4 Toyota Hilux doble-cabina you can afford, and never travel without two good spare wheels locked down.

Everything takes four times as long to accomplish, has to be done over at least twice, and will never ever be drained, plumb, square, true, level, clean, waterproof, or completed.

Learn Chilean Spanish, read everything, believe nothing, trust no-one, lock up everything, lock up everything again, and bring money. Lots of money.

If you come from stock that prize the rudiments of civilisation and occasional clean underclothes, if you are not made of callous and pig-headed stalwart stubborn determination and still believe that there may be a point at which it is stupid to continue, you may wish to consider something other than living and building in the patagonia.

Now, somebody tell me if I am wrong, or at least where your notions of experience may differ.

Well put px.

Yea, there is general missunderstanding among many foriengers wanting to move to Chile about cost of living. They think if they live in some extreme rural area of the Patagonia, it will be cheaper. It may be if you are a Chilean colonial, living about 90% off your own property, riding your horse to town rather than driving, growing your own food, using little to no electrical appliances, and just generally doing without things and not needing to travel ever. For everyone else, it is expensive.

For most foriengers, it will be about 10 times more expensive than any point north of Puerto Montt in total cost of living in almost every respect. Why? Because you will be inclind to use and buy (i.e. depend on) things that are almost 100% imported from points north of Puerto Montt (where the highway ends, and expensive things begin). I am not even talking about things imported from other parts of the World, just Chile. That is if you can get things at all. So, yea it is one of the most spectacular unspoiled places on earth, but for a good reason. Personally, I hope that part of Chile never develops or becomes easy, as that is what is protecting it more than the goverment, laws, or just about anything else.

Thanks for the information and experience. It really is confusing hearing the diverse experiences. So there doesn't seem to be a rule of thumb to how much they will lend based on salary such as in the UK where by you can (could?) get between 4-5 times your gross salary and 100% mortgages.

admin wrote:The property you want to buy will be appraised by the bank, and they will normally not give you anymore than 80% of the appraised value. Obviously, there is a component of your income.

When you say they will not normally give you anymore than 80% of the appraised value, are you talking generally about foreigners only or do this rule apply for Chileans as well?


I'm married to a Chilean princess and since I've been a Permanent Resident I've had absolutely no problems with obtaining anything such as store credit, buying a new car, etc... I work at a University, earn (what I think is) a very good salary and the University has an agreement with Santander (I don't pay maintenance for my accounts or cards although they seem to sting me with foreign purchases). My executive had never previously mentioned needing to have a sizable deposit. I had a deposit of about 10% in mind for purchasing a property, 20% would add an extra year on when we can buy :-/

If I own a piece of land, do they take into account assets such as this when determining how much they will lend me and if I need a deposit?

The banks are tightening up, I was refused a construction loan (to build then I would sell my house which is worth more than double the loan and was offered as collateral) from a bank I have dealt with for 25 years (I am a non-resident these days). I told them fine I’m pulling out of the bank, they said fine until they realized I was talking about my companies also, the “executive” I was dealing with didn’t check any of my references he just said NO, well he doesn’t work there anymore. I would say 20% is the minimum they want these days and a word from the head of your department at the university with your account executive would go a long way, lunch with them both will go further, the personal touch is what is needed down here. Good luck.

Yes, they do take in to account your credit record and other things, but Chilean banks also do not lend out more than a property is worth in most cases. It has nothing to do with being a foreigner (foreigners again normally do not get mortgages at all). It is that banks in Chile do not over expose themselves.

Here is the thing, when a bank forecloses on a property, they are only able to get at auction what is owed to them. The remaining equity belongs to you. So, they are going to make dam sure that if the property goes to auction, there is sufficient amount of the pie left to cover what they are owed. Thus, why Chile did not and will not have a mortgage crisis such as the States had. Say, you have a property bought on mortgage for 15 million pesos. You put a 100 million peso house on it, and then default on the mortgage. At auction it say goes for 50 million pesos. The bank only gets 15 million pesos, and you get the rest of whatever is left over from the auction.

By the way the 80% is the general bank appraised value, not what they might loan to you. I am just using that number, because our appraisers happen to work for a bank (will not say the name to keep them out of trouble) and moonlight doing appraisals for us on the side. We just so happen to get our appraisal calculations from our appraisers using the same spreadsheet formula that the bank uses (including the logo ). Of which there is a slot that says, mortgage value, calculated based on 80% of market value formula. We have gotten that number from many other sources also, just that one I know is the one at least one bank is using internally and I suspect the other banks are not much different. You will often see signs at developments where the company will front you the difference on a house, because the bank will not.

ingrambr wrote:So there doesn't seem to be a rule of thumb to how much they will lend based on salary such as in the UK where by you can (could?) get between 4-5 times your gross salary and 100% mortgages.

When I took out my mortgage, my bank told me there is a Central Bank rule limiting monthly mortgage payments to 25% of your income. I suppose in principle you could derive a lending limit from that, if you have all the other variables including number of years, though I don't know what other limit(s) might kick in sooner. BTW, I'm not sure what the Central Bank's role is here and whether it's just advisory or regulatory. I don't believe there is any subsequent review of this limit, should your income happen to vary thereafter (there wouldn't be room for it in my contract unless it's statutory).

Cheers,

James.