Mortgages: BIESS vs. private banks

There are two ways to finance a home in Ecuador: BIESS, the bank of the Ecuadorian Social Security Institute, which lends to IESS members and retirees, and private and cooperative financial institutions (banks, mutual societies — mutualistas — and credit unions). Neither is best for everyone: it depends on whether you are an IESS member, your income, the property and the terms in force on the day you apply. This guide gives no lender's rates or terms, because they change; it tells you what to compare and where to check them.

Who can apply for each

BIESS also has a first-home plan (Plan CrediCASA, on its Vivienda Premier page) with its own terms, and lets you bring a mortgage from another lender to BIESS (mortgage substitution). Its terms change by resolution: always confirm them on biess.fin.ec. For each product's published figures, see also our mortgage guide.

Where to simulate and check rates

• BIESS: the official mortgage simulator (inmo.biess.fin.ec/simulador) estimates a monthly instalment; online pre-qualification (ph.biess.fin.ec) tells you how much it would lend based on your contributions and income.
• Banks, mutual societies and credit unions: each has its own simulator; always ask for the amortisation table showing the effective rate and every charge.
• Market rates: check the current rates at the Banco Central del Ecuador, which publishes the effective reference and maximum lending rates by segment, including real estate and public-interest housing.

What to compare between two offers

Effective, not nominal, rate

The Superintendencia de Bancos defines the effective interest rate as the one calculated taking into account all the charges the lender applies to the customer (Code of Financial User Rights, no. 20.58). Compare offers by the annual effective rate.

Fixed or adjustable rate

At BIESS the rate is readjusted every 180 days. Ask each lender whether its rate is fixed or variable, how often it is readjusted and against which reference.

Term and instalment

A longer term lowers the instalment but raises total interest. For a finished home BIESS publishes a term of up to 25 years, based on a maximum applicant age of 77.

Amortisation system

Fixed instalments (French system) or decreasing instalments (German system); BIESS lets you choose in the application. Decreasing instalments start higher and cost less interest overall.

Insurance

BIESS includes life, credit-life, fire and allied-lines cover and lets you choose the insurer. In every offer, see how much insurance adds to the instalment.

Costs and fees

Appraisal, mortgage set-up costs, notary and Property Registry. You have the right to know every financial cost and associated fee before signing (Code of Financial User Rights, no. 9.5). Notary and registry fees vary: check with a lawyer or notary.

Prepayment

Users have the right to prepay their obligations without being charged fees, unearned interest or penalties (Code of Financial User Rights, no. 12.6). Confirm how extra payments are applied: to shorten the term or to lower the instalment.

The process, step by step

1. 1

   Work out what you can afford

   Add up your income and subtract your debts. As a reference, BIESS allows up to 40 % of net income; a private lender will apply its own rule.

2. 2

   Pre-qualify

   At BIESS, online and automatically. At a bank or credit union, with the income documents it asks for. Note that a BIESS application expires 60 days after it is created.

3. 3

   Compare at least two offers

   With the official BIESS simulator and the private lenders' own, compare the effective rate, term, instalment, insurance and costs of the same loan.

4. 4

   Choose the property and gather the paperwork

   The lender will ask for the property's documents — deed, certificate of encumbrances and municipal documents. BIESS asks, among others, for the municipal tax payment letter stating who will pay the taxes.

5. 5

   Appraisal and approval

   A valuer appraises the property; the financing is calculated on that appraisal. Review the amortisation table before accepting.

6. 6

   Deeds and recording

   The sale and the mortgage are signed before a notary and recorded in the canton's Property Registry; the lender then pays the seller.

Before you sign with a lender

Check that the lender is authorised and supervised: banks by the Superintendencia de Bancos; credit unions and mutual societies by the Superintendencia de Economía Popular y Solidaria (SEPS), the supervisor of the popular and solidarity financial sector. The Superintendencia de Bancos publishes a list of entities not authorised to carry out financial activities: no one outside the national financial system may take deposits from the public. If you have a problem with your loan, you have the right to file complaints with the customer ombudsman (defensor del cliente) and with the Superintendencia (Code of Financial User Rights, art. 17).

Next steps

• Properties for sale (every listing with a price has the instalment calculator)
• Mortgages in Ecuador: BIESS and banks (published terms)
• Property tax and alcabala when you buy
• Price per m² by canton