Brazilian mortgages and home loans: A foreigner's guide

As the largest country in South America, Brazil has active expat communities in all of its major cities. Strong natural resources and the rapid economic development experienced between 2000 and 2012 meant that many expats moved here for work. Although the economy wobbled, its recent return to growth is good news for expats living, working or investing in Brazil.

If you're one of them, then you might be considering buying a property - to live in yourself, as an investment purchase, or to use as a vacation home. Before you make the plunge, it's good to understand the type of mortgages available in Brazil, and how you might go about making arrangements. This handy guide covers which banks offer mortgage products in Brazil to non-residents, the paperwork you'll need to secure a loan, the legal ins and outs, and how much it might cost.

Mortgages in Brazil: What types of mortgages are available?

The mortgage market in Brazil is underdeveloped, so there aren’t as many options open as there might be in other countries. Usually the maximum loan to value ratio available is 80%, so you’ll need a 20% deposit up front, plus cash for any fees and charges related to the purchase.

Fixed and variable rate mortgages are available. As mortgage rates have been falling from their historic highs recently, variable rate products are more popular.

Different banks will offer different products, so it’s important to check what suits your needs best. Some mortgages will only be offered for the purchase of commercial properties, for example, while others might be more appropriate if you want a buy-to-let or summer home in Brazil.

Learn more about moving to Brazil

Should I go to a bank or use a broker?

Using a broker to get a mortgage will always add costs. However, in Brazil, where the mortgage market is fairly difficult to navigate, using a broker can be helpful to ensure you get the best possible deal.

Be wary of fraudsters who claim to be brokers - especially if they ask for upfront fees. Take recommendations from friends or family when choosing a mortgage agent, or ask to be put in touch with previous customers for a reference.

What are the legal requirements to get a mortgage in Brazil as a foreigner?

There’s no legal reason you can't buy a property in Brazil as a foreigner. As a non-resident you can buy property in urban areas, although there are some restrictions on buying property in rural and protected parts of the country. Usually, if you intend to buy land or property in one of these areas, you must intend to move there within three years of purchase.

Foreigners, resident or not, can legally buy property in Brazil. However, getting a mortgage might be tricky, as it's down to the rules of the institution you choose. Unless you're a legal permanent resident, it's highly unlikely you'll be able to get a home loan. If you do find a bank that suits your needs, you'll be asked to provide your Brazilian tax number (CPF), and you'll need notarized copies of your personal identification documents.

How can I get a mortgage in Brazil as a foreigner?

Getting a mortgage in Brazil is difficult, and as a foreigner your options might be limited. Taking local advice from a specialist is essential.

Paperwork (documentation)

The exact paperwork you'll need will depend on the bank you use. However, you can expect to be asked for the following:

• CPF (Cadastro de Pessoa Física) number
• Copies of your personal identification documents (passport)
• Proof of legal residence in Brazil
• Documents to support your application and prove you have enough money to service the loan (usually proof of your wages or a letter from your employer)
• Land registry certificate of the property you’re buying (at the point of finalising the mortgage)

Any documents which aren’t in Portuguese, will have to be translated by a sworn translator in order for the bank to accept them.

The step-by-step process

To get a mortgage in Brazil, you’ll generally need to follow these steps:

• Find a broker who can help you explore your options for a Brazilian mortgage
• Choose a bank who offers a mortgage that suits your needs
• Provide the paperwork requested and get an offer in principle
• Find a home you love and agree a purchase price with the seller
• Finalise your mortgage through your chosen broker
• A deposit of 20% is usually required to secure your purchase
• Both parties must sign a deed provided by your notary, who will also register the sale
• Your broker will help you finalise the remaining 80% payment, and you’ll be responsible for servicing the mortgage and paying any outstanding fees

Fees

When you arrange a mortgage, whether you choose to do so in Brazil or in your home country, you’re likely to have fees to pay such as administrative fees and legal costs. Your mortgage provider might also insist that you have a survey done on the property you are buying, to make sure the construction is sound and that the price you’re paying is fair. The exact costs will vary depending on your circumstances.

In Brazil, when purchasing a property, you can also expect to pay the following fees:

• Notary costs: 1.25% of the purchase cost
• Transfer tax: 2% - 4% of the property cost depending on the situation
• Registration fee: 0.75% of cost
• Legal fees: 2% of the property purchase price

If you’re arranging your home purchase before moving to Brazil, you might find paying for things a bit difficult unless you’ve already opened a local Brazilian bank account.

If you already have a bank account in Brazil and you need to send money to yourself from abroad to pay for the costs and fees, then it’s important to check the fees you’ll be charged when you make an international money transfer.

Often times, your home bank won’t offer you the best deal. Even if they claim to offer fee-free transfers, you can be sure that their cut will be rolled up into a poor exchange rate.

A better option is the use a specialist service like Wise who offers the real mid-market exchange rate you can find on Google and adds only a small, transparent fee.

Convert money automatically at your preferred rate using the auto conversion feature. All you have to do is pick the rate you want and Wise will take care of the rest!

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What are the major banks in Brazil providing mortgages to foreigners?

It's still fairly hard to secure a mortgage locally in Brazil, especially for a foreigner. Interest rates have been very high over the past 15 years, although they’re slowly falling now.

In many cases, it's better to get a mortgage in your home country and use it to pay the costs of your home in Brazil. However, in some circumstances, if you're a permanent resident, you might be able to get a local mortgage with one of the following banks:

• Caixa is government-operated and offers various mortgage products including some suitable for foreigners
• Banco Itau offers mortgages which might be suited to resident expats, depending on the circumstances
• Bradesco also has mortgage products on their books
• Or try a Global bank with a Brazilian presence, such as Santander

Glossary of important terms

If you’re starting to look for your perfect new place in Brazil, it can help to have a few words of the local language. Here are some important terms to help you:

• Mortgage
• A loan-to-value (LTV) ratio
• Repayment mortgages
• Interest-only mortgages
• Fixed rate mortgages
• Variable rate mortgages
• Tracker mortgages
• Discounted rate mortgages
• Capped rate mortgages

Buying a new home is a big step, and when you’re buying in a new country, it can be a daunting process. Understanding your options and getting the right local advice is essential to make sure the process works smoothly.

Do your research and you’ll make sure you get a deal that works for your circumstances. Before you know it, you could be soaking up the sun and enjoying your new home or summer pad in Brazil.

Good luck with buying your new home!