Grupo Gap continues to create solutions to better enhance your returns and safeguard your investment. For some time now, we have been proposing to our investors to offer low risk mortgage loans at 9.75 to at most 10% for “Triple A” loans.
What are Low Risk Mortgage Loans (“Triple A” Loans)?
A Triple A loan is one with a 30% or less Loan-to-Value (preferably 15-20% LTV) with good paying borrowers. The collateral property needs to be in one of our preferred city areas like Escazú or Santa Ana, or at some of our popular beaches such as Jacó, Tamarindo or Santa Teresa.
We have a lot of competition right now from newly-landed wealthy foreigners who have decided to become lenders. Of course, every new borrower will try to say that their property is valued at X and that this is a 30% Loan-to-Value loan and I deserve 10% interest. We of course will inform them of the truth about the value of their property. At which point we recommend a 12% rate to attract investors.
If a $100,000.00 loan comes in on a million-dollar home, then subject to due diligence we would recommend a 10% interest rate to be competitive. We have spoken with many of our lenders in the past that every month their hard-earned money sits idle, they are losing out on returns. We are not suggesting that your entire portfolio will be earning only 10% a year for the next 3 years, rather that you allocate a percentage of your portfolio for these types of low risk mortgage loans. As many of you have already experienced, what you may miss out in points on a 10% loan, makes up for it with a stronger sense of security, because the Loan-to-Value ratio is so low on the collateral.
The Benefit of Low Loan-to-Value
Loans with low Loan-to-Value ratios are also far less likely to run into difficulties. Being able to offer loans at 10% interest rate is something that will drive people to our company. Once they fill out our online application, we have opportunities to choose from. As mentioned above, the vast majority will not qualify for that rate. But, we will engage with them at that point and continue with the loan process at the 12% rate that we typically recommend. What we really need from all the interested parties is an idea of what amount of your portfolio you would set aside for these types of loans. This is essential for us to advertise the low risk mortgage loans. Most applicants won’t qualify, but this will generate more loan requests!
Once we have the profiles of those that are willing to participate, we will be receiving more loan requests. The next question will be “how much of my portfolio should I allocate for this type of loan?”
The answer is simple: as much as you feel comfortable with! Balance is always a difficult calculation, but the most influencing factors are the following:
- How much income do you need monthly from your investment?
- Do you need the interest payments for living expenses or does it just accumulate until the next loan is available?
- Do you have a time element to consider? i.e. make as much money as you can for the next X amount of time for whatever reason.
Please update your profile by clicking here in order to not miss out on any of our loans. Let’s start increasing your investment returns today!
WE ARE HAPPY TO HELP YOU!
If you require assistance related to any of our offered services or have a question, please don’t hesitate to contact us.
(Investments, Mortgages, Real Estate)
Phone: (506) 4001-6413