Financing your property
Many say that it is isnt possible for a foreigner to find financing options in Thailand. This is very far from the truth. Talk to your property agent, lawyer and a reliable bank to find out your options out of the following possibilities;
- Local Bank Loan
Thailands Banks are known to provide personal loans to qualifying individual foreigners that have lived and worked in Thailand for a number of years. This includes
- Credit cards
- Business loan
- Medical treatment
- Property purchase (condominium)
- Property renovation
- Car purchase
The following are some of the important qualifiers for you as a foreigner to gain access to local Thai Bank loans:
- You as the loan applicant must:
- Have a stable and secure job.
- Have a fixed income 3x more than each instalment repayment.
- Your age + loan period should not exceed 60 years.
The documentation needed for the application includes (but is not limited to):
- Minimum 1-year work permit or Thai resident permit.
- Letter of employment (showing number of years employed in Thailand and annual salary)
- Pay slips
- Employers company details
- Credit Check
- Copy of passport (with visa page)
- Marriage certificate (if applicable).
- Copy of bank statements
- Copy of title deeds and sale and purchase contracts
For many banks, the combined amortization (repayment) of the loan has to be more than seven years. Interest rates are usually based on a fixed interest rate and can be competitive from bank to bank so make sure you do your research before making a commitment.
Around the world, if someone does not qualify for a local loan a mortgage is commonly the next option. In Thai property Law, mortgage contracts occur when someone who want to assure their creditor that they will repay a debt, they mortgage their property as security or collateral.
Mortgages are not easy for foreigners to get from Thai Banks for the following reasons;
- Since foreigners cannot own land, the house or villa that is being mortgaged is not easily regarded to be reliable collateral since the land underneath it is owned by someone else.
- In order to buy a condo, a non-resident foreigner must transfer foreign currency to Thailand for the amount of the price of the condominium or more. This further complicates the situation is said foreigner is aiming to mortgage a property for the financing. This could only work if a Thai Bank can provide a loan in foreign currency.
Due to all of the above it is highly recommended that you must see a lawyer before proceeding with taking out a mortgage. However, do not be discouraged, obtaining a mortgage to finance your purchase of property in Thailand is possible. Currently, there are only two Thai banks that provide mortgage bonds to foreigners – Bangkok Bank and United Overseas Bank (UOB). The loans/mortgage bonds that they issue are based in foreign currencies e.g. Singapore Dollars, Japanese Yen, US Dollar or Euro. These banks use their offshore branches in Singapore to conclude the bonds.
If you do not qualify for a local bank loan, Bangkok Bank and UOB can both offer you up to 70% of the property’s value. There are processing fees, which you have to pay and for Bangkok Bank you will have to actually go to Singapore and meet them in person during your application process. UOB appears to have slightly higher interest rate but they allow you the benefit of applying from Thailand/abroad and not having to fly to Singapore.
Conditions for a Mortgage
Under Thailands Civil and Commercial Code, there are certain rules, which must be adhered to in order to qualify for a mortgage and be protected;
- You must have the correct documents showing your ownership of the property.
- The mortgage contract must be in writing
- The mortgage contract must be registered with the proper authorities;
- If you have Land with Title Deed you must register at one of the following:
- Land Department Bangkok Metropolis Land Office (Branch)
- Provincial Land Office or Provincial Land Office (Branch) where the land being mortgaged is located.
- If you have Land with NO Title Deed like Nor Sor Sam (3) you must register at the District Office
Visit the banks own websites for more information on their individual conditions for mortgages/loans.
- Developer Financing
Recently, developer financing has grown in popularity. Buyers of new condos and houses can get financing for 2 years to 10 years directly from the developers. The structure of deals offered vary with each developer and each buyer so it important that you have a reliable lawyer and property agent to guide you in the right direction.
Your lawyer and property agent should warn you off scams that offer free financing or 0% interest. These deals have obviously hugely inflated the price of the property to cover the cost for the developer. It is in your best interests if the negotiation for the price of your property and for the financing should are completely separate.
- Seller Financing
In order to incite interest in their property, individual property owners in Thailand have opened up to offering financing to their potential buyers. In these cases, buyer and seller both sign a purchase and sale agreement AND a promissory note. Here it is also advised to negotiate the price of the property separate from the financing deal. A good lawyer is crucial in this process, especially because the owner of the property will continue to hold the title deed (Chanote) until the payment has been made in full by the buyer.
- By marriage financing
In certain case, a Thai spouse can qualify for a mortgage bond. The purchase and sale agreement will have to be signed by the Thai spouse because the name on the property ownership documents must match the name on the mortgage bond. If the foreigner in the relationship is funding the majority of the costs, it is possible to register for a long-term lease with the foreigner as the lessee and the Thai spouse as the lessor. Once again, these by marriage scenarios can get sticky if the relationship ends so a lawyer and some deep consideration is extremely necessary in this scenario.
For more information, please contact your Dream Estate Hua Hin property agent, click here!