Buying a home is not easy when you lack the funds for an outright purchase. Many homeowners have to seek financing that will cover the portion of this investment they cannot afford. Even for those that have adequate funds, it is sometimes desirable to take up some debt that they can pay off to keep their credit rating good.
For foreigners interested in new house and villa projects in Pattaya, there is often the desire or need to borrow some financing. However, it is difficult for a foreigner to acquire any property in Thailand. The only way to own a property freehold would be to purchase a condominium that still has an allowance for foreign ownership.
A foreigner can get a property loan to purchase a new condo, but the terms of borrowing tend to be strict and the option of banks limited as compared to what local borrowers can get. It is also worth noting that the interest rates charged on such borrowing can be significantly higher than what many westerners would be offered in their home countries. As long as you can meet the requirements, it is not very difficult to access financing.
Foreigners That Can Apply for Property Loans
The banks that currently offer property loans to foreigners include Bangkok Bank PCL., HSBC, Siam Commercial Bank PCL., Thai Military Bank PCL., Tisco Bank, and United Overseas Bank (UOB). These few banks that offer property loans to foreigners tend to have strict requirements. These include:
- Being a registered permanent resident
- Have a work visa, with at least 1 year’s work experience
Condominiums are the only properties of which foreigners can have their names on the deed. Even if a foreigner is married to a local, they can only act as guarantor for the loan and will not be able to have ownership of the property.
For those that qualify to apply for property loans as per the criteria above, the banks will have set conditions. These conditions may vary from bank to bank but will generally include:
- A maximum loan repayment period of 15 years, or the difference between the age of the borrower and 60 years, whichever is shorter. Some banks may however have a lower maximum repayment period.
- Stable and sufficient income earned in Thailand. It should be at least three times the monthly instalment to be paid on the loan. Evidenced through bank statements, payslips, and letters of employment.
- Good credit score
- Location of property be within Bangkok or selected areas in Thailand
- Loan amount limit of 70% of the property’s bank appraised value or purchase price, whoever is lower
The loan applicant will also be required to submit copies of their passport, including the visa page and any official ID card. If married, they may also be requested to submit their marriage certificate.
When it comes to interest rates, the figure is typically based on the MLR or fixed interest rate. This currently ranges between 5% to 8%. Given how long this loan can last, it pays to shop around to ensure you are getting the most competitive rate.
International Home Loans
It is not a must to be living and working in Thailand to secure a property loan. Foreigners have the option to take up offshore financing to buy property in Thailand. They can borrow up to 70% of the property value. These international home loan schemes are available through two banks.
Bangkok Bank’s Singapore branch offers these loans to qualified borrowers in a variety of currency options. The United Overseas Bank (UOB) in Singapore also recently launched a similar credit facility. The key difference between the banks is that Bangkok Bank requires the applicant to present themselves physically at the branch in Singapore when applying, while UOB can process the loan for foreigners while in Thailand. The interest rates are similar while the processing fee may currently be higher with UOB.