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Mortgages In Brazil

Discussion in 'Brazil Property' started by michaelbush, Dec 18, 2007.

  1. michaelbush

    michaelbush New Member

    THese have been very difficult times for sales in Brasil, due to the lack of a mortgage market. Constructor deals have normally been for Brasilians only. I have been in negotiations with a Brasilian bank here in Natal, and have a solution for our clients wishing to finance their purchase. It is being fine tuned at the moment. Not the most attractive deal, but it can be done for around a 5 year period on a 70% loan to value maximum advance. Interest rate will work out to be around 6%. I will try to answer queries by Private Message only.
  2. robh

    robh Administrator Staff Member Premium Member

    Hi Michael,

    Sounds like an interesting deal but how can Brazilian banks lend you money at 6% when the Selic (central bank overnight lending) rate is currently 11.25%?

    I can't see any bank losing at least 5% per year so I am really interested in seeing how this works.

  3. michaelbush

    michaelbush New Member

    Hi Rob- this was the question I had too- and it seems you are right! On going carefully through the figures again it appears that it is worked like a personal loan with the interest loaded up front so the 6% pa is really more like 12% APR! I intend to re-visit the bank in question to see if there is a better deal to be done! When it is too good to be true -it usually is not true!! The rate is still better than a credit card though, so may be attractive to people who cannot re-mortgage a property in Europe for instance.
  4. michaelbush

    michaelbush New Member

    Still fine tuning!! Looks like finance will cost around 9%-10% or 5% fixed.
    Rob, if you will send me an email I will send you a model to look at and comment on. Needs another head I think!! mbush5 at
  5. RalphJ

    RalphJ New Member

    Tell ya Michael, in all my years here, I've NEVER heard of less than 1% financing per month. And those rates are usually offerred by the builders and for very short 5 years.
  6. robh

    robh Administrator Staff Member Premium Member

    I sent you an email, but aol is always bad for over zealous spam detection so it probably didn't get through. My address is robh at uv10 com
  7. robh

    robh Administrator Staff Member Premium Member

    I have heard of 11% from banks for longer than 5 years so things are changing.
  8. michaelbush

    michaelbush New Member

    Rob, was not able to get hold of the bank manager today, and I am returning to the UK for Christmas tomorrow! At present the model looks like an interest rate of 8.5-9% apr.
  9. RalphJ

    RalphJ New Member

    Things are changing Rob but certainly not drastically. And you can take that from someone on the ground here that works with the banks on a daily basis. Although there has been in the neighborhood of 20 reductions in the SELIC over the last 24 months the reduction to the consumer hasn't came close to matching the reduction in the percentage that the banks are now borrowing for. Meaning...the banks are making even MORE money than they were before here in Brazil.

    Believe me, 3 years ago Bradesco here set a world-wide record for percentage of profit growth from one year to another. The Jews in NY went beserk when they saw what Bradesco accomplished....and it's no wonder.

    Once again I'll state, if anyone wants to get a loan for a high cost item here in better be within 60 months or your in for some extremely high interest payback. Not like 11% per year isn't high interest already! Compound that interest over 15 years and see what ya get.
  10. surfingbrazil

    surfingbrazil New Member

    Wait a moment please!

    You are talking about granting mortgages to a foreigner in a Brazilian bank in order to finance an investment in Brazil?

    Are you kidding?

    These banks are notorious miser red-tape minded and abusive crooks having a heavenly situation due to an irrational political support.
    They are not there to help!

    They do not open a current account to a foreigner, which is the most basic thing once he or her got a property in Brazil.

    Moreover, nobody finance anything in a high yield currency. The BRL is a risky not convertible high yield currency.

    Michelbush, do not waste your time in fruitless discussions, try instead to convince them to open accounts to foreigners.
    If you succeed, then you will really become “Natal,s Number One”.
  11. nickohorny

    nickohorny New Member

    why can't a foreigner open a bank account and when do you (if you do) think this will change in Brazil and come into effect?
  12. nickohorny

    nickohorny New Member

    why can't a foreigner open a bank account ? and when (if you do) do you think this will change and come into effect for Brazil?
  13. RalphJ

    RalphJ New Member

    Banks are now requiring RNE (registro numero estrangeiro-foreigner registration number) numbers for foreigners opening bank accounts, although Banco Central states that foreigners can open accounts only with a CPF number, passport number, and proof of residency, it simply isn't the case in practice. Banks that open accounts for foreigners without a RNE number are required to do much more bureaucratic work every month in maintaining the account since banco central adapted stricter accounting requirements due to money laundering, hence, most ALL banks in Brazil today do not accept account holders without a RNE number. RNE numbers are only acquired through obtaining some type of permanent visa (investors, retirement, etc).
  14. nickohorny

    nickohorny New Member

    I see, I knew foreigners couldn't open one unless as stated on a previous thread it was to go through some sort of fast track method of investing $50,000 into the country through a company.

    I am just trying to figure out the reasoning behind it all, so basically it is all because Banco Central have made stricter requirements for the banks?

    So is there currently nothing in discussion or some kind of movement on changing this considering the amount of foreigners investing into the country?

  15. RalphJ

    RalphJ New Member

    Not that I've heard of. But you/they will be able to open an account after obtaining your investors visa...but that will take some time to obtain. I had dinner last night at a nice restaurant here in my city recently opened by a young, Portuguese, foreign investor. We have became friends over the last year and last night he told me he was getting upset because it's now been 20 months since he applied for his permanent visa and has yet to receive it. And he hired a lawyer to whom he paid 3,500 reais to handle the situation for him. He's called everyone he can and all the departments involved but it's just the slow, bureaucratic, process that exists here in Brazil unfortunately. The main thing he's upset over is exactly this....he can't open up a personal bank account.

    It took me a year and a half to get mine and I married a brazilian who works for the federal gov't. And I feel that I would have never gotten it when I did if she didn't go to Brasilia personally after 15 months and talk to the people in the department responsible.
  16. robh

    robh Administrator Staff Member Premium Member

    According to my contacts (who are in a position to know) Brazil is in for a few changes over the next 3 to 5 years in the banking and credit sectors. So whilst what you are saying is true now it wont be for too long.
  17. RalphJ

    RalphJ New Member

    Well, you can certainly believe me when I say that no one hopes for what you're saying to come true more than myself, as it would certainly facilitate my life and work here. As far as the changes, Brazil certainly has a lot of work ahead of them Rob, at the moment there isn't another country with a higher rate of interest, and that's not because they're borrowing at a higher rate, as they also have the highest "spread" of all countries.

    I would love to know who your contacts are though, as if they can predict market conditions accurately they should be very wealthy...and could make us all very wealthy!! You'll have to forgive me if I'm a bit cyncial about some things as I've been in Brazil on a day-to-day basis for a decade now and we always hear A is going to happen and get better, B, C, etc., and it just never seems to happen, or it happens but is replaced by another problem as bad as the one that was resovled or worse. As what happened to Brazil's debt...they virtually paid off the IMF but replaced it with domestic debt....not sound fiscal policy or the correct way to go about reducing debt.

    As you seem to know a lot about Brazil Rob you problably know that approximately 20,000 families control this country....unfortunately. It has one of the highest, if not the highest, unequal rate of distribution of income on the planet...hence, the rich get richer(ultra rich) and the poor can't get much poorer, as there are approx. 12 million brazilians making less than 1 dollar a day and 44+ million making less than 2 dollars a day. To say that "bankers" have great influence over brazil is like saying it gets humid in the Amazon.

    In my 10 years here I've had bank accounts and do have bank accounts at 4 different banks. Bradesco, Banco do Brasil, Caixa Economica, and Banese. My "pessoa juridica", although investing close to 4 million reais over the last 4 years has NO line of credit. You have to show brazilian monthly income to get a line of credit regardless of what your situation may be outside of Brazil. And my personal accounts, in which I have a perfect credit rating, have a total of about 20,000 reais in available credit between the 4 banks....and I pay 13% interest a MONTH if I decide to use any of that credit. I actually procured a secure loan several years ago for 40,000 reais, around 12,000 pounds at the moment, and the loan was SECURED, and I had perfect credit, long history and great relationship with the bank, I received a rate of interest of 4% per month! I paid the loan off after 4 months since if I would've held it to it's 18 month term the interest would've been ludicrous. And as I've stated, things have gotten better here over the last 18 months, but they haven't even came close to matching the reductions in the SELIC in respect to passing these savings on to the consumers....they've just made the bankers even more money.

    One has to consider as well, at this moment the dollar, british pound, and euro are the cheapest they've been in Brazil since the "real plan" was announced in late 1997 as when the real was introduced they put the value of it above the dollar!! At the beginning of the "real plan" one dollar was actually worth 96 centavos!! I know a retired brazilian military man that went and purchased as many dollars as he could back then with his life savings he acquired....and shortly after, within 24 months, one dollar was worth 3 reais. I wouldn't bet on the dollar going much lower than it is now....Banco Central won't allow it, they're already getting beat up on exports/imports at the value it is now. And the U.S. is by far and away the largest trading partner brazil has.

    As far as your contacts that are in a "position to know" careful if that's what they're telling you, as not even Guido Mantega nor Alan Greenspan can tell you what changes are going to transpire in the banking and financial sectors here in Brazil over the next 3-5 years. Too many unknown factors to consider that have yet to even take place.

    We can only hope sound fiscal policy continues to take place here in Brazil as has over the last 5 years or so. They have a presidential election coming up in 2010....and George W. is gone after 2008. Thank God.
  18. robh

    robh Administrator Staff Member Premium Member


    Thanks for the advice but I used to be a consultant in the banking sector which is why I have contacts in a position to know.
  19. JMBroad

    JMBroad New Member

    That surprised me a bit. Thought I had read somewhere that the EEC is now Brazil's largest trade partner. Also remember financial analysts being optmistic about Brazil's economic growth for 2008 as it had "distanced itself from the dollar dependency" but I could be wrong.

    Even if I'm right, the US is still a very significant trade partner.
  20. RalphJ

    RalphJ New Member

    That's great that you used to be a consultant in the financial sector Rob but does that mean you know what is going to happen in world economies?? Sorry, but I think not. As I stated, not even the ministro de secretaria de fazenda, Guido Mantega, knows what will transpire in the financial industry in Brazil over the next 3-5 years...and if anyone is in a position to know, it certainly would be him. Will interest rates rise, or fall, by how much? Will the real strengthen or weaken? The dollar? The euro? By how much? Will banks begin to give more reasonable lines of credit and more creative ways to finance?

    Those are all questions that no human on this planet can answer with any certainty in respect to the next 3-5 years at this moment, not in the U.S., not the U.K, and sure as hell not in a country like Brazil which has an economy much more unstable as those mentioned.

    It does us no good to speculate about what will transpire in the next 3 years, because that's all it is, speculation. And if everything that has been rumored to have happened actually did here in Brazil since I moved here, we'd have 5% apr interest for 30 year mortgages, good infrastructure all throuhgout the country, 95% of the population would be receiving a quality education, and the death rate would be around 12-14 per 100K. Unfortunately, it just ain't the case.
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