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New Construction Loan Question


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Hello All,

I was wondering if anyone has experience with new construction loans in Costa Rica. My Tica wife and I have been putting together the required documents for HSBC and they have asked for all the final blueprints for our project from a certified architect, and the permissions/permits from the various government agencies, including the local municipalidad de Parrita, before they can extend us a loan. Now, what happens if I pay thousands of dollars to our architect to get this done, and the bank does not approve a construction loan large enough to cover the cost of our project? Do I then repay to have the entire process redone for a much smaller home? When we asked the banker this same question, they just looked at us with a puzzled face. Any help in this matter or architect/engineer recommendations in the Parrita/Esterillos area would be greatly appreciated.

Here are more or less the specifics of our financial situation:

 

Approx Land Value $40K (5,326 sq meters –gated development)

 

Monthly Income $2,500.00 (I work remotely for a US based Firm)

 

Debt $15K (2.99 APR for the life of the revolving loan – balance transfers to credit card offers *And yes, we did schedule automatic payments so the APR doesn’t go thru the roof and we don’t use the cards any more.)

 

We have good credit in the US of A and approximately $20K in cash to put towards the new construction. I estimate the entire project will cost about $60K with all the permits, percentages, etc. So, we will probably need a loan for around $40K, but I’d feel better if it were $50K so we would be ready to deal with the unexpected complications that will no doubt come our way.

 

Thanks again for the help,

Colier

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First, why would you pay thousands of dollars for the architect for plans for a single family dwelling? Second, if you're building in Costa Rica, the cost to him/her should not be so much, and third, permits and architectural plans should be part of the construction cost, shouldn't they?

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The minimum price that certified architects charge for the plans is based on a percentage of the total cost of your project. And as far as I know these fees charged by the architects are not included in the construction cost, unless the architect is part of the construction company building your home, and I have read some different opinions that say it is cheaper to find your own builder and keep the architect seperate because they can charge you another 6% to locate a suitable builder. These percentages are set by the Colegio Federado de Ingenieros y de Arquitectos (http://www.cfia.or.cr/index.htm) and they can cost as much as 5 to 6 % of your construction project cost. So, lets say the cost of my project is going to be 50K… Thus, my blue prints could cost as much as 3K to have drawn up by a certified architect. Now, if I’m wrong, please correct me, because this is obviously my first time building in Costa Rica and is the reason I am seeking help here.

Thanks,

Collier

Edited by Collier d.
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I can only tell you what I know: find a builder first, and let him provide the plans. A good builder might well already have plans from which to choose, and all that you would need to pay the architect for would be a few changes to suit your needs. I know of at least one project where the architect was actually American (a personal friend of the owner), and his plans were accepted when submitted for permits. Of course, this was not a project that required bank financing. But, my point is that the owner and the builder did not have to pay exorbitant fees for the plans.

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If I can get away with only paying $500.00 bucks to get the final blueprints for a $50 K home along with soil samples, etc I'm all about it. Has anyone else had an experience like this? Thanks for the comments jdocop, I hope I can find its true. Right now I'm leaning towards Navarro Construction Group (http://www.constructoranavarro.com/). I have seen a couple of their other projects in the area and they look impressive.

Edited by Collier d.
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  • 2 months later...

Hi Collier.

 

My suggestion is asking your engineer or architect for a previous project. I mean, a first draft sketch, so you can ask the bank´s representative what are the expectations you could have for the loan.

 

The idea is paying just the draft sketch to the professional or having an agreement to pay the whole service just if the bank give you reasonable proofs it would lend you the money you need. If you have enough capacity for paying the loan, you could include the designing costs into the it.

 

If the bank says, according to the first sketch, you have to reduce the design, you can adjust, with the professional´s assistance, the size of the project in order to match your expectations and capability, according to the bank´s analiysis.

 

Good luck, in any case.

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