How to Finance a Real Estate Purchase in Brazil
Acquiring financing for private use is an essential task for those in need of credit in Brazil. Purchasing real estate makes credit acquisition essential. How to secure a private loan in Brazil is an intimidating yet manageable process.
Background
If bringing suitcases full of cash to Brazil is not a viable option, a private bank loan is in order to make a real estate purchase. Making this type of purchase in Brazil normally requires some sort of financing. It is not the hallmark of the Brazilian culture to finance a real estate purchase through a bank like it is in the other countries such as the U.S.
The financing real estate process in Brazil is unique. For example, the FGTS employment severance fund that an employee has accumulated can be used towards a real estate purchase. It is important to note that not any property that catches your fancy can be financed. It is common in Brazil for banks to restrict financing to only houses and apartments located in urban areas. Evening more distinctive is that banks can determine a higher annual rate based on not only the buyer’s credit profile but the value of the property.
Requirements
Getting a loan for a real estate purchase in Brazil is a similar process to those in other countries. The first step once deciding that financing is the right move is to satisfy requirements.
Loan Requirements
- Value of loan is within the minimum and maximum
-Bradesco – maximum of 400,000
-Itaú – maximum of 800,000
-Banco do Brasil – minimum of 20,000 maximum of 1.5 million
- Maximum percentage of real estate eligible for financing.
-Bradesco and Itaú – 80%
-Banco do Brasil – 90%
- Collateral requirement – Normally the property being financed.
- 30 year maximum loan repayment period.
Personal Requirements
- Bank Account – Banco do Brasil requires a bank account with them.
- Proven income with a maximum of 30% designated for the loan
- Between the ages of 18 to 80.5
Property documents
- Proof of zero outstanding property debt known as the Certidão de Inteiro Teor da Matrícula do Imóvel com Negativa de Ônus
- Proof of zero municipal tax debt know as the Certidão Negativa de Impostos e Taxas expedida pela Prefeitura
- Copy of the first page of the current IPTU tax documentation
Required Banks Forms
- Health declaration – Declaração Pessoal de Saúde
- Business consultation and sale option – Consulta de Negócios e Opção de Venda -Buyer authorization for the release of sellers certificates
Personal Documents
- CPF – buyer and seller
- RG or RNE – buyer and seller
- Buyer’s Marriage certificate, except for singles
- Seller‘s marriage certificate, except for singles
- Proof of zero back taxes for the buyer and seller – CRF/FGTS, SRF/PGFN and CND/INSS
Process
The steps in the process are quite simple once all the proper documents have been gathered. Preliminary approval for loans can even be received via text message from certain banks in Brazil. The steps in the process are as follows:
- Simulation – Choose the values and repayment period and submit online to the bank.
- Credit Check – After submitting the simulation, go to a local branch of the bank with applicable personal and financial documentation for approval.
- Property Evaluation – Once granted approval, the property being financed needs to be evaluated using the required property documents and forms.
- Closing – Once the process has been approved, the buyer and seller will finalize and sign the contract at the local bank branch.
- Registration – After the contract is signed, it must be notarized and the ITBI – Imposto sobre Transmissão de Bens Imóveis, or property transfer tax, must be paid. The notarized contract and tax payment receipt must then be delivered to the local bank branch in order to for the funds to be transferred to the seller.