Finance is one of the most important factors to consider when purchasing a property. If you cannot secure the necessary funding, loan or mortgage then your property venture is practically a non-starter. Even if you have the required deposit or means to afford a mortgage, you still have to find a bank or financial institute who will help you through the legal process of purchasing a property and facilitate your monetary transactions.
This issue is taxing enough for nationals wishing to purchase a property, but for foreigners who wish to invest in a property abroad, securing finance can often become a problem. Thailand has become a popular country for expats, foreign entrepreneurs and retirees who wish to work and live in an exotic location with a range of well-developed properties and public infrastructure. If you are seriously considering a move to Thailand, you must be aware of the finance options available so you can secure a mortgage and process your transactions seamlessly.
If you have the initial capital required to purchase a property in full then you do not have to worry about finance, but for those who do not have this luxury, the following should provide a strong overview of what options foreign buyers have at their disposal:
Property Finance Thailand
There are three main options available for finance – a mortgage from a Thailand bank, a mortgage from an overseas bank, or a private loan. The following paragraphs describe a little more about each of these options, together with the pros and cons:
A mortgage from a Thailand Bank
In most cases, potential foreign buyers will simply apply for a mortgage through a bank in Thailand. This is the most straightforward method, but it is not without its issues. The availability for mortgages to foreigners has only gained approval and traction in recent years. Generally, when applying for a mortgage through a Thailand bank, you will be directed to their overseas branch and in most cases will be required to provide application documentation such as ID, a reference and even previous bank statements or proof of earnings. This type of finance provides the best interest rates, but also requires the most effort and time.
A mortgage from an overseas country
Some buyers opt to use an overseas hotspot bank to secure a loan or a mortgage and there is a range of banks in countries such as Singapore, Malaysia and Hong Kong that provide this service. The main drawback with this method is that interest rates are generally higher than loans offered in Thailand. This may not be an issue, but for those purchasing rental properties, it can reduce the amount of potential profit.
A private loan
This is generally the least used option and is usually reserved for those who cannot secure a mortgage from a bank. Private loans are generally easier to obtain, especially for foreigners, but the downside, as with an overseas mortgage is that the interest rates will be much higher.
As you can see there is certainly a variety of options available for foreign buyers but they provide varying chances of success. There is no denying that the process of obtaining finance if you are a foreigner is much more difficult than if you are a Thai citizen, however, the government has taken steps in recent years to improve the availability and process of obtaining mortgages and loans. 5-10 years ago, it would have been unheard of for a foreigner to gain a mortgage in Thailand, but times have changed and the dream has now become a reality.
Link article: Financing a property purchase in Thailand: Proceed with caution
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