Securing finance for a property is a daunting prospect for most people, even in their native country. Therefore, getting a bank loan for a property in Thailand fills most of us with a sense of dread, especially if we believe all the misinformation that proliferates the internet. “Thai banks don’t give mortgages to expats.” “Thai banks only loan to expats if they have a Thai spouse.” Well, guess what? Getting a mortgage in Thailand has never been easier, as long as you follow some simple guidelines and have realistic expectations. The following article guides you through what you need to consider and complete, to guarantee securing a bank loan for your dream property.
When purchasing a property, finance is the first thing that needs to be taken into account, before you even start the search for your dream home. For those of us not lucky enough to have sufficient funds to pay cash for a property, the banks are usually the first place we turn to for financing. In Thailand, obtaining a mortgage as an expat has, until recently, been extremely difficult if not impossible. However, in recent years attitudes have changed as the Thai government has tried to encourage banks to be more open to promoting economic growth and expanding tourism in line with AESAN economic philosophies and the onset of the AEC in 2015. There are still some strict criteria in place, due to the recent world economic crisis, and banks being more aware of the need to protect their assets. However, obtaining a mortgage in Thailand has never been easier, as long as you follow some basic rules.
Understand Your Requirements
Before you even start looking at what properties are on offer in the market place, you need to know exactly what finance you want and look for a product that best suits your requirements. You need to ask yourself, how much you want to borrow, how quickly you want to pay the loan off and how much you can reasonably afford to pay back each month. Most banks will not lend 100% of the property value. Typically they will lend 70-80% of the cost, which also needs to be taken into account.
Assess Your Financial Status
When applying for a mortgage there are non-refundable fees levied to your application, which vary between banks. You, therefore, want to ensure that you have carried out a thorough check of your finances to avoid wasting money. Contact the National Credit Bureau and ask for a credit check, to avoid any surprises. You will need to submit a copy of their report when applying for a mortgage anyway. Carry out a full review of your finances to understand what regular expenses and commitments you have to ascertain what disposable income you have available each month to repay the mortgage. You will also need to provide a deposit of between 20-30% as most banks will only lend between 70-80% of the property value.
Research All Available Options
Use the internet or better still, make an appointment to see the bank in person to see what loan options are available, and what the terms and conditions are for each product. They do vary considerably from bank to bank. Loan terms for example, are a maximum of 7 years with some banks, whereas others stipulate the applicant must be less than 60 years of age when the loan terminates. Most banks insist that the applicant must earn 3 times the amount of monthly loan repayment. These restrictions need to be taken into account when determining how much you can afford and how quickly you want to pay the loan off. Additionally, when buying a property it must be held in your own name and registered as a condominium under the condominium act and the condominium units owned by a foreigner cannot exceed 49% of the project.
Prepare the Documentation
The documentation required by each bank is extensive and varies slightly between banks. Create a checklist of all the documentation required by the bank for inclusion with the mortgage application and other loan application criteria that must be met. Typically a bank will require the following:
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.
You will be under 60 years of age when the loan period finishes.
Your monthly income is 3 times greater than the value of the monthly loan repayment.
You have a 1 year work permit or Thai resident permit.
PatienceThailand is no different from any other country when it comes to obtaining a mortgage - it takes time. The bank need to carry out due diligence to ensure that you are a good investment risk. The checks they need to make take time, as they are reliant on multiple third parties to provide them with information. When you initially discuss your mortgage with the bank, you should ask about the timescales for loan approval. You can then set your own expectations and that of the property seller/developer. However, it is always advisable to build in some slack to any dates provided. You can help by ensuring that you understand, assess and research the options available. Ensure you meet the individual bank’s requirements and provide all the required documentation as early as possible.
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