If you lack the capital required to purchase a property in Thailand outright, all hope is not lost. There are a range of options available designed to give a leg up to prospective buyers but you must proceed with caution…
Bangkok offers some amazingly affordable properties with some condos in the capital currently priced at just $35,000. This is easily achievable for most first time investors or lifestyle buyers. Loans / mortgages are not commonplace at the entry level of the market. However, for higher priced properties, or for those looking to buy several properties, there are other options designed to provide a cash boost to help finance your investment.
*We are not financial advisers but we have extensive knowledge of the Thailand property market. Our advice is based on first-hand experience and managing property purchases throughout Thailand.*
Loans / Mortgage via Thailand bank
You may think that you can borrow money from a Thai bank to buy Thailand property. It’s not that simple for foreign buyers, unfortunately. Being approved for a loan via a Thai bank is not commonplace for overseas property buyers but it is possible. Due to the fact the funds have to come from an overseas source and currency to buy property in Thailand the local bank will direct you to an overseas branch of their bank at the stage of application. It is commonplace for the prospective borrower to be asked to present a one year work permit, proof of income such as bank statements and pay slips, pass credit checks and prove that income is a minimum of three times the amount of the loan if you are able to apply at all. It is also worth noting that Bangkok Bank in Singapore will ask for you to visit in person to process the application, other banks may allow applications in Thailand but charge higher fees. Weigh the costs up to decide which is the better option for you.
If you have a Thai spouse the mortgage application process is easier and provides a better chance of a positive outcome. Depending on whether your spouse has an income or not, will depend on the amount you are able to borrow loan to value (LTV). SCB Bank is known to be one of the more flexible banks when it comes to lending to overseas buyers with Thai spouses. Rates can be high, at around 7% for loans to foreigners. If the loan is for a Thai national only, interest rates are likely to be much less (closer to 3%) and provide more appealing borrowing terms.
There are certain stipulations that Thai banks place on mortgages, such as a lender not being able to hold a mortgage beyond the age of 60. Mortgages must be paid off by the borrower’s 60th birthday.
Example Application Documentation (required by Krungsri Guru) :
• A completed application form.
• A copy of your I.D card/Passport including essential visa pages.
• A signed copy of your sales and purchase agreement or reserve agreement.
• A reference letter from your existing bank, confirming accounts held and value of deposits and loans you have.
• Six months of banks statements.
• A Credit Bureau Report from your country of residence.
• A letter from your employer, confirming your position, length of service, salary and last two years of income tax returns and last six months of computerized payslips.
• If self-employed the balance sheet and profit and loss statements from the last two years.
In Thailand, a foreigner may only own a condominium in his/her own name. If the foreigner wishes to acquire land and build a house, he/she should obtain a long term lease on the land (for a period not exceeding 30 years each term). Source: Siam Legal
Mortage from other country
If you are an overseas property buyer in Thailand the money must be brought in from abroad, in a foreign currency. The main hotspots for overseas banks lending to buy property in Thailand are Singapore, Hong Kong and Kuala Lumpur (Malaysia). Banks such as ICBC, UOB, Bangkok Bank and Citi Bank all offer loans but interest rates are typically 6% or 7%, the lowest we have seen from memory was from ICBC at 5.5%. These rates are quite unattractive to serious property investors because they wipe out much of the rental income.
If you are financing your property and are not eligible for a mortgage for whatever reason, you may wish to apply for a private loan. Consider the fact that a private loan could work out more expensive, but is likely to be less hassle to obtain. Lifestyle buyers sometimes opt for this route, as they are not purely focused on rental returns and long-term yields. MBK private loans are unique in Thailand and provide a solution for buyers of property in Thailand that lack the funds to purchase outright.
For investors: having the cash to invest is a powerful asset in Thailand. Healthy returns can be made, especially when purchasing off plan property and for those willing to make calculated speculations with the support of an experienced real estate agent. Having the cash ready and waiting means when an opportunity is present, it can be exploited. It also means no rental yield is lost via expensive loan repayments.
Lifestyle buyers are more likely to be relaxed about paying high interest on a loan if it saves them from renting a property long-term. Financing is a solution for individuals looking to live in the property for part of the year or full-time.
We provide full support for overseas property buyers in Thailand. You can expect non-biased advice from us, as we aren’t tied to any particular developers. Furthermore, we have many years’ of first hand experience of the Thailand real estate market. We recommend buying property off plan with your own assets when possible.
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