Borrowing to buy property in Brazil

03/19/23 @ Itoby955 the Banco Central's SELIC rate is projected to hit 12.75%/yr by the end of 2023. You'll never get that, of course, but it sets the floor.

Here are the current monthly rates from the leading banks on a R$150.000 loan for thirty-six months, to someone with outstanding credit and clear title on a property, if the bank is willing to lend. Full numbers are at the link, which also lets you calculate other time periods:

Caixa -- 1.67%

Banco do Brasil -- 3.48%

Itaú -- 3.8%

Santander -- 4.86%

Bradesco -- 5.21%

That's a big bite!

https://jurosbaixos.com.br/emprestimo-150000-reais/

Calculator defaults to 120 months, but you can set it to 36.

Regarding the credit rating, how do they work it for newbies to Brazil AB three?

03/20/23 Regarding the credit rating, how do they work it for newbies to Brazil AB three?
-@ltoby955

You're suddenly back to exactly where you were the week before you started your first job right out of school:  no credit, and no immediate prospect of any -- a disorienting situation at our age!  In fact, it's a little worse than that, because you're in a country where people regularly default on their debts, so lenders are very hesitant to extend credit, and your credit rating from abroad is non-transferable.   One of the reasons that I always encourage expats to establish personal relationships at their banks is because when you do, at least someone in the financial industry knows you, and that may speed the process.

The "process" is to live here for a while, have regular bills in your own name, and pay them all on time, always.  Gradually, you build up a record again, just as you did the first time.  There are no centralized credit bureaus here; unpaid creditors report you to the local Cartório de Protestos, and you get a "dirty name", a nome sujo.  It's up to you to clear that up at the cartório, and/or with the creditor. 

As members who are more involved in the real estate industry have written, builders in Brazil often fill in for the lack of credit available from banks by providing their own financing.  The interest rates are awful, and the documents must be reviewed carefully, but for the average new expat, that may be the readiest source of credit available.

That's great I had a wobble with my Brazilian girlfriend but we remain friends so it's now a go solo on the visa etc. I am going to the Brazilian embassy here in Portugal just to see if it's feasible with my pension and salary income to get the retirement visa. I will probably then rent for some time.

Great info as usual. Thanks a lot guys!!!

@ltoby955  great luck

Folks, I told you all before. 

You got for find yourself a seller who is willing to finance the sale. 

That will require a " Contrato de Alienacao Fiduciaria". Which translates into a finance contract with your buy fully colateralized and the title of deed held by the selling party until you have a quitclaim deed.

Terms are likely to be be short, 3-5 years tops.   Which is already done on pre-construction sales to parse your 25-30% downpayment.

And lender interest rates won't be competitive.  That and the fact the Contract will also have inflation indexed installment adjustments. 

Builders will need guarantees. 

You can also create a group to buy a building in a Coop/Tenancy in Common so to get more favorable rates.  Anything that shows rates of return is seen more favorably by banking. 

A lot of funding for residential building projects these days is done through securitization. 

Buying a residential unit with a commercial banking loan in Brazil is not the best way to acquire real estate.