What You Need to Know About Getting a Mortgage in Thailand
Though it used to be that Thai home buyers bought houses primarily with cash, savings or through direct arrangement with sellers; that’s changing as Bangkok and other parts of Thailand become more modernized. Today, many Bangkokians opt for the same style of mortgages that are popular through much of the Western world.
Here are a few things that might be somewhat different about mortgages in Thailand:
The Age Factor
One stipulation that Thai banks place on mortgages is that a lender can’t hold a home loan past the age of 60. Thai banks assume that people older than 60 won’t have the income to repay a hefty mortgage. That’s why mortgages must be paid off by the borrower’s 60th birthday.
In other countries, people may continue to work or receive a Social Security or pension that provides plenty of income. In Thailand, however, social security payments are small and fall far short of the amounts needed to repay mortgages.
So, though mortgages are regularly given for 10, 20 and 30 year periods, age must be taken into account when considering what repayment period you are eligible for.
If you are 20 or 30, any repayment period will work for you. If you are 40, you may only choose a mortgage with up to a 20-year repayment period. If you are 50, only the 10-year repayment option will be applicable to you.
Terms and Conditions
Though we have covered the repayment periods above, there are still other terms and conditions to consider before applying for or accepting a mortgage.
You need to consider how much of a down payment you can afford and what percentage you need to finance. Most Thai mortgage companies will expect a 30-40% down payment and that you will borrow 60-70% of the home’s value.
Foreigners and Mortgages
It used to be nearly impossible for a foreigner to get a mortgage in Thailand. That began to change in the last fifteen years. Today, many banks see loans for foreigners as good for the general economy as well as for their own profits.
Getting approved for a mortgage as a foreigner is tricky but not impossible. It’s a bit more difficult than, say, company registration in Thailand, but much easier than, for example litigation in Thailand.
A few Thai banks offer options for foreigners as do Singaporean banks such as UOB. There are also private lending companies that lend to foreigners such as MBK Group.
The criteria for getting a loan as a foreigner can be strict. Most lending institutions will require that you hold at least a 1-year work permit and a letter from your employer stating your salary and length of service to the company in Thailand. Pay slips, company documentation, credit checks, ensuring that your loan will not exceed your 60th birthday and that your monthly income is three times the amount of the monthly loan repayment are all standard requirements.
What Can Foreigners Buy?
The 1979 Thailand Condominium Act allowed foreigners to legally be able to own a condo (or several condos) in the country. The only limit on the law, however, is that foreigners can’t own more than 49% of the units in any one condominium building.
Foreigners can’t own a house since they are not technically allowed to own land in the country. However, most houses lie outside the city and most lenders don’t want to lend for properties upcountry.
If All Else Fails…
In case you don’t currently qualify for a mortgage, you might still have other options. Remember, this is Thailand, where there’s a will, there’s a way.
You can set up a lease with the option-to-buy with the current owner and a lawyer. Also, many developers offer direct financing to buyers of their units and the structure will differ depending on which developer you work with.
No matter how you purchase your property in Thailand, make sure you have a qualified attorney, such as the staff at Silk Legal, review that all due diligence is done and that your investment is protected.
Contact Silk Legal to review your loan or lease agreement today!