So you’ve found your dream home in Thailand, but in order to make it a reality, you need finance. Now you wonder, what options are available for you as a foreigner to get a loan to buy real estate in Thailand?
Unfortunately, it is rather difficult for foreigners to get a bank loan in Thailand.
As in Western countries, almost all financial institutes in Thailand have no trouble offering loans for real estate purchases to locals, but bank loans given from Thai banks to foreigners have been few and far between, to not say unheard of.
While some banks claim to give out loans to non-Thai citizens, it should be noted that there are strict terms to be met in order to receive financing, which severely limits a foreigner’s access to loans.
It's also worth noting that one important condition is that the property has to be held in the foreigner’s own name, which limits the loans to condominiums which is the only type of property that can be owned foreign freehold, and the property has to be registered as a condominium under the Condominium Act. In other words, if you are looking for a loan to buy land or a house in Thailand, that will not be possible.
While we have seen a positive shift in policy in recent years to allow foreigners at least limited access to financing we still recommend you to contact banks at the very early stages of your property search if you do not have the funds for a cash deal as acquiring a bank loan in Thailand as a foreigner is far from a straightforward process.
Financing Options for Foreigners in Thailand
There are two options available to foreigners:
- Finance from local financial institutions (banks)
- International home loan schemes for Thailand
Finance from Local Financial Institutions (Banks)
Not all banks in Thailand offers loan to foreigners, but a couple that do are HSBC, Siam Commercial Bank, and Thai Military Bank. Each individual institution has its own policies on lending to foreigners, but there are certain criteria that are pretty much universal.
Proof of a stable and secure job.
- A work permit of no less than 1 year or a Thai resident permit.
- Proof of employment in Thailand, sucha as 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.
- The fixed income must be at least three times the agreed monthly repayment.
- The total amortization period of the loan must exceed 7 years (the period varies depending on the bank).
Do I need to submit any other documents?
You must also be prepared to be able to present the following documents 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 and sale and purchase contracts.
While all this might seem doable at first glance, keep in mind that this list is not exhaustive and as already mentioned, every bank has its own individual policies.
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, they 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 the loan 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 you will have to travel to Singapore for a face-to-face meeting only 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?
The Thai Civil and Commercial Code – Section 702.
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.
For further reading, we recommend our popular Can Foreigners Buy Property in Thailand article and our piece on Reasons to Buy a Condo in Phuket.