Brazilian mortgages: quick tips for foreigners
Brazil counts 750,000 foreigners living on its territory. One natural question for these foreigners is: “should I buy real estate in Brazil?”. Well, an important factor here is mortgages. In particular, interest rates.
Mortgages in Brazil: how much will a bank finance?
In Brazil, banks finance up to 80% of the property price. Although this may seem high, it means that the buyer needs to finance 20% as well as any fees and charges related to the purchase.
What are the interest rates in Brazil?
Interest rates in Brazil are extremely high. Indeed, mortgage interest rates are above 7%. The key rate defined by the central bank is still 6,50%, after peaking at 14,25% in 2015.
Bottomline: when it comes to financing your property in Brazil, the best advice for a foreigner is to take a loan in your home country.
Comparison of interest rates around the world
Brazil is one of the worst countries when it comes to interest rates. Considering a mortgage for 25 years, here are the interest rates you may expect in several countries:
Brazil is, sadly, leading the ranking.
Sky-high interest rates are choking Brazil’s economy
Interest rates for mortgages are not the worst, and the Brazilian Report even mentions mortgage interest rates above 10%.
Buying a Brazilian property worth €100,000
Let’s say you want to buy a Brazilian property worth €100,000. What will that cost?
- €758 per month during 25 years if you took a loan in Brazil, at 7,80%
- €410 per month during 25 years if you took a loan in France, at 1,70%
Bottomline: invest or not invest?
Taking into account that:
- Brazilian real estate prices are very stable since 2014
- Euros and Dollars are twice stronger compared to Brazilian Real compared to 2014
You may want to invest now in Brazilian real estate, considering that it’s a good time to invest. The only thing however, is that it’s best to avoid taking a mortgage in Brazil. Therefore you may invest only if you are cash-rich, or may get financed by a bank from abroad with better rates.