Can Foreigners Get a Loan to Purchase Property in Thailand?
So you’ve found your dream home or project, but in order to make it a reality, you need finance. What options are available to you in Thailand?
As in Western countries, almost all financial institutes in Thailand offer local Thais loans for real estate purchases. However, thanks mainly to the government’s wish to increase tourism, thereby encouraging economic growth, there are more opportunities for foreigners to procure loans. It should be noted that there are strict terms to be met in order to receive financing, which does limit a foreigner’s access, but this is nonetheless a positive shift in policy.
What are your options?
There are two options available to foreigners:
- Finance from local financial institutions (banks)
- International home loan schemes for Thailand
Finance from Local Financial Institutions
There are several banks in Thailand and they all offer a range of financial services to Thai people from credit cards to business loans. Individual institutions have their own policies on lending to foreigners, but you need to meet certain criteria.
What are these criteria?
Proof of a stable and secure job.
- A work permit of no less than 1 year or a Thai resident permit.
- A letter from your employer which clearly states your length of service and annual income.
- As further proof of income, you will need to attach payslips to the above.
- Banks are also entitled to request company documents from your employer to ascertain the sustainability of their employment.
Sustainability of payments
- Credit checks will be conducted on the applicant.
- The repayment period and the applicant’s current age cannot be more than 60 years when added together.
- Their fixed income must be at least three times the agreed monthly repayment.
- The total amortization of the loan must exceed 7 years (for some banks).
Amortization – is the repayment of the loan principal overtime.
The loan is amortized (repaid) according to an amortization (repayment) schedule, typically through equal payments. Each payment to the lender will consist of a portion of interest and a portion of principal.
Therefore the loan repayments must be spread out over more than 7 years.
Do I need to submit any other documents?
You may be required to submit the following as part of your application:
- Copies of your passport inclusive of visa page, identity card or government official identity card.
- Marriage certificate (if applicable).
- Copies of bank statements.
- Copies of land or unit title deeds, sale and purchase contracts.
REMEMBER this list is not exhaustive and as mentioned above, every bank has an individual policy.
Can you give me some examples of other requirements?
- Condominiums being purchased must be registered as such under the Condominium Act.
- Requiring that the mortgage is in the foreigner’s own name.
What interest rate can I expect?
This is dependent on specific bank offers at the time and is typically offered on fixed-rate terms. If you want to be sure of the best rate then you will need to complete a comparison of individual bank rates. They are competitive so it’s worth doing.
What other factors are involved in granting a loan amount for the property?
Banks generally have their own valuation process from which they ascertain a fair market value for the property.
International Home Loan Schemes
This scheme allows foreigners to buy property in Thailand even if they don’t live there. Initially introduced in 2005 by the Singapore branch of Bangkok Bank, it can offer up to 70% finance to foreigners wishing to purchase property in Thailand. With more and more foreigners looking to have a dream holiday or eventual retirement home in Thailand, the demand for this is rising and therefore the Singapore branch continues to offer this service.
What currencies can I be paid in?
They can offer loans in numerous currencies
Is there a charge for this service?
There is an administration fee for this service.
How do I apply?
Here’s the catch, as they insist on meeting applicants in person, so will have to visit Singapore if you wish to apply.
Are there any alternatives to Bangkok Bank?
No doubt having realized the demand, the United Overseas Bank (UOB) now also offers a similar service. They don’t have as much experience under their belt as Bangkok Bank, but it does give foreigners a choice. More than just choice, business competition means competitive deals for customers.
What is the difference?
This is exactly where competitive deals can sway you as the customer depending on your needs.
- Presently, the terms of the 2 banks are similar with their interest rate, so not much sway there.
- UOB also has an administration fee, but it is a little more than Bangkok Bank.
- However, UOB does allow the customer to apply for the loan in Thailand and therefore there is no need to visit Singapore.
The choice, as always is yours and will depend on what you are comfortable with.
Criteria for Mortgages
A final note on mortgage criteria and protection under Thai law.
What legislation covers this?
What rules do I have to adhere to in order to qualify for protection under Thai Law?
- The right of ownership of the property must lie with the mortgager.
- The mortgage contract needs to be in writing and registered.
- Individuals must register the mortgage for land with a title deed at the Land Department, Bangkok Metropolis Land Office (Branch), Provincial Land Office or Provincial Land Office (Branch) where the land being mortgaged is situated.
- Individuals must register the mortgage for land with no title deed (e.g. a Nor Sor 3) at the District Office where the land being mortgaged is situated.