Mortgage Credit to Build a House: How to finance your project in Chile

Finance Your Dream: Self-Construction Mortgage

Many clients are unaware that they can build their custom home with bank financing, just as if they were buying a used house. This product is called Self-Construction Mortgage Loan (or General Construction Purposes).

How does it work?

Unlike a normal mortgage where the bank hands the check to the seller, here the bank becomes your financial partner during the work.

1. Project Approval: The bank not only evaluates your income, but also the viability of the project. They will ask for:

   • Approved Building Permit.
   • Detailed Construction Budget (signed by the construction company).
   • Construction Schedule (Gantt Chart).
   • Land Appraisal + Project (the future value of the house).

2. The "Down Payment": Generally, the bank finances up to 80% of the construction cost. The land usually counts as part of your contribution (down payment).

3. Progress Payments (Payment States):

   • The bank DOES NOT deliver all the money at the beginning.
   • "Milestones" are agreed upon. Example: Milestone 1 (Foundations), Milestone 2 (Rough Work), Milestone 3 (Finishes).
   • When we finish the foundations, a bank appraiser visits the site, verifies progress, and the bank releases the payment for Milestone 1.

The Role of Canadian Houses

This process requires a financially orderly construction company.

• Bank Documentation: We deliver budgets, quantity surveys, and specifications in the format required by banks (Santander, Chile, BCI, Scotiabank, Estado).
• Inspection Fluency: We accompany the appraiser on their visits to clarify technical doubts and ensure they approve progress quickly, so the money flow doesn't stop.

Financial Tip: This loan usually has an interest rate similar to a housing mortgage, making it the cheapest way to finance construction.