If you are an expatriate and you wished to purchase a house in Thailand but you need a financing plan to back you up? Well, there are a number of financial institutions that can help you achieve your goals. But before going through the list of banks that can let you a loan, let us discuss the fundamentals of mortgage in Thailand.
Whatever your nationality, social status and financial capabilities are, it is likely you will seek for financing in order for you to purchase a property in the Kingdom. And probably, you must have heard that obtaining mortgage lending by local banks to foreigners is nearly unheard of in Thailand. Such assumption is true but recent developments, partly because of the recognition of the government on the roles of foreigners in the promotion of Thailand and growth in tourism, the country has somehow relaxed a bit and allowed the expats to avail such loans under certain conditions.
This has led some banks to open their doors to would be borrowers of foreign origin. However these loans often do come with strict terms and conditions making it harder for non-Thai nationals. Among the most important of these conditions is the fact that the property must be held in the foreigner-borrower’s name and basing on the Land Code and Condominium laws of Thailand, the foreigner can only own a property with freehold title deed if such property is a condominium.
Local Lending in Thailand
Terms differ from bank to bank as they are largely dependent on the policies of the Bank of Thailand for each fiscal term and on each bank’s business strategies which may vary every year.
For a foreigner to be granted with a loan for the purchase of a condominium, conditions must be met first. Generally, these loans are granted on the fair market value of the property basing on the bank’s valuation process.
However, there are other important criterions that a foreigner must qualify. These are the following:
A certificate of employment issued by the employer indicating the duration of his service in Thailand and also the annual salary
Pay slips are usually attached
The bank may also require the company documents of the employer
The bank will also conduct credit checks on the foreigner
The sum of the applicant’s age and the load period must not exceed 60 years
Aggregate amortization of loan must exceed 7 years (depending on the bank)
The applicant’s job should be stable and secure and that his fixed income must be three times than each installment repayment
Upon application, the bank may be required to submit additional documents:
Copies of the borrower’s passport including visa page, identification card or government issued identification card
Marriage certificate of the applicant and his spouse (if applicable)
Copies of bank statements
Copies of land or unit title deeds, sale and purchase contracts
The interest rates of these types of loans are usually based on the MLR or on a fixed interest rate depending on the bank offer at the time of application. Also, loans offered in Thailand have competitive interest rates therefore it is beneficial for the borrower to inquire on various banking institution first before deciding on which bank he will avail of the said loan.
International Home Loan Schemes for Thailand
It was around the middle months of year 2005 when Thailand witnessed an emergence of a financing service pioneered by Bangkok Bank’s Singapore branch, the offshore financing for foreigners who want to buy real estate properties in Thailand. At present day however, there are still only a few banking institutions that offer this type of loan. But, requirements may be stringent and terms may be unattractive. Bangkok Bank, however, no longer offer such loans due to unstable economic environment but it may offer it again when they believe it would be viable.
However, the market for financing schemes for non-Thai nationals is still around and other banks such as the United Overseas Bank (UOB) offers similar service in Singapore along with the more recent MBK Foreign Finance Scheme through Thanachart Bank.
As more and more banks start to offer financing for foreign nationals with intention to purchase real estate in Thailand, this could only mean: improvement on the position of the borrower in terms of rates, more investments and growth in the nation’s economy.
Criteria for a Mortgage
Certain rules must be adhered to in order to qualify for protection under Section 702 of the Thailand Civil and Commercial Code.
The mortgagor must have the right of ownership of the property;
The mortgage contract must be done in writing and must be registered;
The parties must register the mortgage to the authorized Officer for the following cases:
Land with Title Deed – this has to be registered at either of the following: Land Department, Bangkok Metropolis Land Office (Branch), Provincial Land Office or the Provincial Land Office (Branch) where the land being mortgaged is located.
Land with No Title Deed (ex. Nor Sor 3) – this has to be registered at the District Office where the land being mortgage is located.
While obtaining loans from banks by foreigners remain to be very hard, there is still an increase in interest for financing services by expatriates. Looking at the present trend, it seems to be that the financing schemes for non-Thai nationals are getting accessible especially in recent years.
It will be a wise decision if you seek the advice of a reputable financial adviser or lawyer and study the market first before making a decision that will affect you and your family’s future.