Getting a Mortgage in Chile: A Guide for Foreigners

Chile is one of the most popular tourist destinations in Latin America. Many foreigners who visit decide to move here permanently. To buy an apartment or a house in Chile, it is not necessary to be a citizen of the country. However, not all immigrants have the financial means to pay for real estate upfront, so many consider a mortgage. Chilean banks offer loans for the purchase of housing to residents, provided that certain requirements are met.

The Right to Obtain a Mortgage in Chile for Foreigners

Foreigners have the right under Chilean law to apply for a mortgage loan. The conditions for obtaining a loan are set by each financial institution and may vary. The loan amount for migrants can be up to 70% of the total cost of housing, whereas for citizens it can be up to 100%.

Residence and Legal Aspects

Lending to foreigners in Chile is associated with increased risks for banks. Therefore, many banks take additional security measures when working with this category of clients. To reduce risks, banks impose requirements on applicants, such as having residency and supporting documents. Legal residence in the country for more than one year with a residence permit or permanent residency is a prerequisite for a mortgage. Many lenders require a certificate of permanent employment and may require the participation of a guarantor with a Chilean passport, who cannot be married to the borrower.

To apply for a mortgage, you must submit a package of documents to the bank. The complete list of documents can be found on the bank’s website or requested from the bank manager. After reviewing the documents, the lender will decide whether to grant the loan or reject the application.

Key Conditions and Requirements

One of the most important requirements for a mortgage in any country, including Chile, is a down payment. For foreigners, the down payment is set at 30%. Each bank sets its own terms, including the interest rate. The cost of the mortgage depends on the size of the down payment, the availability of guarantors, and the reliability of the borrower, assessed by checking their credit history. If the credit history shows breaches or is missing, the mortgage may be denied. Therefore, it is advisable to open an account in a Chilean bank and apply for a credit card to build a positive credit history before applying for a mortgage.

The repayment period for a mortgage can be up to 30 years, depending on the age of the applicant. Usually, the requirement is that the borrower should not be more than 65-75 years old at the end of the loan agreement, with age limits varying by bank.

According to statistics, the average mortgage interest rate in Chile is 14.28%. The minimum rate is 4.44%, and the maximum rate is 15.15%.

The Mortgage Process in Chile for Foreigners

The process of obtaining a mortgage in Chile consists of several steps. The first step is to find a suitable financial institution and collect the necessary documents. The list of documents required by each bank may differ, so you should familiarize yourself with the relevant information on the lender’s website. Contact the financial institution to make an appointment for a consultation with the manager.

During the meeting, the specialist will examine the documents and make a preliminary conclusion about the chances of approval and the possible loan amount. The bank makes a final decision only after underwriting, which involves checking the credit history and solvency of the client and their family members.

At the end of the underwriting process, the applicant is notified of the bank’s decision, which could be an approval, rejection, or request for additional documents.

Depending on the results, the available mortgage programs and loan terms are determined. If the proposal is acceptable to the client, a contract is signed specifying the loan term, amount, interest rate, and the rights and obligations of both parties. The client receives a repayment schedule and must take out a compulsory real estate insurance policy.

Submitting an Application

Foreigners and Chilean citizens follow the same procedure to apply for a mortgage. However, expatriates must first obtain a unique resident number (RUN) from the tax office and start paying taxes. If you have your own business, this should be done independently. If a foreigner is an employee, their employer is responsible for tax obligations. If working remotely with income from abroad, the bank may require a tax return for the last year or several years.

When visiting the bank for the first time, you should have the following documents:

• Application form
• Identity card
• Residence permit or permanent residence permit
• Proof of ownership of the property to be purchased
• Marriage or divorce certificate
• Cohabitation or separation certificate
• Birth certificates of children, if any
• Certificate of the last three salary payments or, for self-employed individuals, a certificate of employment history of at least one year
• Last notarized tax return or certificate of self-employment
• Certificates of property ownership (car, real estate, securities, etc.)

The bank carefully checks the applicant’s solvency, requiring a stable source of income sufficient for loan payments. Monthly obligations to the bank should not exceed 30-40% of the borrower’s income. Banks typically refuse mortgages to people with low incomes.

Another important condition is the absence of the applicant in Dicom, a register of debtors. This register contains data on individuals with outstanding obligations, arrears, or collected debts. Financial irregularities remain in the register for five years after the debt is paid, after which all data on the former debtor is deleted.

Chilean citizens with a good credit history and high income can obtain mortgages without a guarantor. For foreigners, many banks require a guarantor with a Chilean passport, who cannot be the borrower’s spouse. This person takes responsibility for the documents and guarantees mortgage debt payment.

Choice of Bank and Mortgage Program

Chilean legislation aims to create equal conditions for all residents, regardless of nationality. Therefore, foreigners with a residence permit or permanent residence permit can apply for a mortgage in any bank. However, conditions, available loan programs, and approval likelihood vary by financial institution.

When choosing a bank, borrowers often focus on the interest rate without considering other important factors, such as the lender’s requirements for the client and their income, property characteristics, application approval probability, additional commissions, transaction speed, and complexity.

The top five best and most reliable banks in Chile include:

• Santander Chile Holding;
• Banco De Chile;
• BancoEstado;
• Scotiabank;
• Itau CorpBanca.

According to immigrants’ evaluations, it is challenging to obtain a loan from Banco De Chile despite its commitment to serving all client categories. BancoEstado has the highest number of positive reviews. Foreigners whose financial situation meets this bank’s requirements usually have no problems with mortgage registration. However, to increase the chances of success, it is advisable to apply to several banks simultaneously and choose the best offer.

Mortgage Types

Chilean banks offer three types of mortgages:

• Fixed rate (the interest rate remains the same throughout the loan term)
• Variable rate (the interest rate depends on changes in the underlying index)
• Mixed rate (fixed rate for the initial period, then variable rate)

In addition to universal mortgage programs, Chilean banks offer options for the self-employed and for young people. The self-employed can receive loans for 5 to 25 years, with a minimum interest rate of 10%. The rate is determined individually based on the loan amount, property value, down payment size, and client solvency.

Mortgages for young people feature reduced interest rates and commissions, focused on financing apartments and condominiums of a certain class in specific areas. Young people can expect housing near their work or educational institution. This type of credit has fewer borrower requirements but offers a smaller amount of funds, with accompanying products such as life and health insurance. A good credit history and fixed monthly income are required.

Mortgage Conditions

Santander Chile Holding:

• Interest rate: from 11.35%
• Maximum loan amount: 90% of the home’s value
• Duration: 10, 15, or 20 years
• Possibility of reducing the interest rate to 10.35% with timely payments

BancoEstado:

Interest rate: determined individually

• Maximum loan amount: 90% of the home’s value
• Duration: 8 to 30 years
• Grace period: up to 6 months
• Possibility of a preferential interest rate

Some banks, such as Santander Chile Holding, do not require a credit history. However, if it exists, the lender considers it when evaluating the applicant’s reliability.

How to Simplify the Process

You can simplify the mortgage process and increase approval chances by using the Chilean Citizenship by Childbirth program. This option involves moving during pregnancy. Medical care in Chile is highly developed, and childbirth in Chilean hospitals ensures safety and comfort for both mother and child. Children born in Chile automatically become citizens and can obtain a passport from their parents’ country. Parents and close relatives can become citizens of Chile after three years of residence on a residence permit.

For smooth procedures of moving, childbirth, paperwork, and mortgages, it is recommended to contact international law specialists. These experts provide support services at all stages. The “turnkey” service includes relocation organization, housing search, medical facilities, and citizenship in Chile. For detailed information, schedule a consultation.

Buying real estate in Chile with a mortgage is available to all residents, regardless of citizenship. However, having a Chilean passport simplifies the procedure and offers favorable credit terms. To avoid problems and mistakes, carefully consider the choice of bank and mortgage program. The best option is to pre-register citizenship by birth in Chile with the help of lawyers. This way, you don’t have to wait for the passport to buy a house. If necessary, it is possible to purchase real estate immediately after the birth of a child. Parents of a newborn Chilean are entitled to a resident visa.