Getting a Loan to Build a House

09/04/24 @Andrewsoluna.  Here's on good primer on home construction financing in Brazil, so that you and the financial institutions are speaking the same language when you start talking to them:

https://www.cashme.com.br/blog/como-con … onstrucao/

@Andrewsoluna This is not for everyone apparently, but my wife has taught me to live debt free. When I came here two years ago, we built a house on her property, debt free, for $20k. I also bought a less than new Chevrolet sedan for less than $20k. We don`t owe anybody anything and we have continued that way for many years. For the record though, I have Banco Do Brazil.

Roddie in Retirement

@Andrewsoluna

I have had construction loans in Brazil before, and the banks here always look for large amounts of security - like another home in Brazil, (not in another country), valued well in excess of the total amount you want to borrow. Good amounts of credit is much harder to come by in Brazil, than anywhere else - especially compared to the USA.

I think you may need to have a very good track record over a period of some 12 months before they will consider you, no matter how good a security risk you think you might be, unless you have a large amount of collateral in excess of the loan you require - in which case why do you need to borrow?

And I will not even start on the interest rates...!

@Peter Itamaraca

"And I will not even start on the interest rates...!"

Heh.......KKKKKKK

    @Andrewsoluna I think you may need to have a very good track record over a period of some 12 months before they will consider you, no matter how good a security risk you think you might be, unless you have a large amount of collateral in excess of the loan you require - in which case why do you need to borrow?
And I will not even start on the interest rates...!   

    -@Peter Itamaraca

So true!  Perhaps one of the hardest things for a foreigner who's had an outstanding credit record for years (or decades, in my case) in their own country to adjust to in Brazil is that you have to start over from scratch -- it certainly was for me!  When I first opened my  bank account at Banco do Brasil they wouldn't give me a credit card -- period.  After a year, I think they finally gave me one, with a credit limit of R$2,000, if I remember correctly.

After seven years with a spotless record, they've finally given me a reasonable credit limit and are offering me loans -- not that I have any interest in paying Brazilian interest rates, as both @Peter Itamaraca and @Gasparzinho777  have pointed out. 

And I will not even start on the interest rates...!        -@Peter Itamaraca

Since the person asking seems to have family in Brazil, how do people who start in that process get a loan?  Is it through the usual bank of "mom and pop" or "relatives"?   I am guessing here.

Is this a common thing in Brazil?  How does someone who grew up away from Brazil start that type of discussion?

I know that this is dependent on region, and other factors...  Just wondering what is the common way of handling this and what are the pitfalls.....

My inlaws never borrowed money for a house. My wife said people here saved and saved and saved, until they could buy one for cash, like we did with our condo in Copa. Brasilians never really got on the mortgage lending train until about 15 years ago IIRC when I started to see banks offering them. Which coincidentally is when housing prices started to rise due to the influx of newly sourced capital.

Lots of builders offer in house and in some cases zero interest financing, but IMHO, it appears to be in areas where demand is less, or the housing does not qualify for use of FGTS or traditional bank lending, common in the NE where you have a large builder owned lot with numerous houses and an undivided interest in the land, not separate titles.

My perspective anyways.

@Andrewsoluna @james chapman