The Complete Foreigner’s Guide to Getting a Mortgage in Thailand
There is plenty of misinformation about buying property in Thailand floating around on the Internet, and it has likely had the unfortunate effect of turning people away from purchasing real estate in one of the most beautiful and unique (and for foreigners, affordable) places in the world. Fortunately, contrary to the claims of online forums claiming you need a Thai spouse or a work permit in Thailand or some other onerous requirement to buy property in the country, this simply isn’t the case (although a Thai wife might not really be that bad…). Under new laws passed by the Thai government in recent years, property owning and loan taking by foreigners has never been easier. If you know the general guidelines and a few Thai-specific rules, you’ll be ready to move into your beautiful condo in Thailand in no time!
As when taking out any loans, you’ll need to be able to prove your identity and your ability to pay back the loan. The documents you would need to take out a mortgage on a Thai property aren’t radically different than those you’d need for any other property in the civilized world. These include:
- A copy of your passport
- A completed application form
- A signed copy of the purchase agreement or reserve agreement
- A reference letter from your bank, detailing the value of your account and outstanding loans
- Six months of bank statements
- A letter from your employer, detailing your employment
- 6 months of pay slips
- If self-employed, 2 years of worth of balance sheets and profit/loss statements
- A credit report from the nation in which you live
- 2 years worth of income tax returns
Thailand does have its own specific regulations concerning mortgages and property buying with which you should be aware. These include the following:
- Foreigners cannot purchase more than 49% of the condos in any project. This ensures the building remains under Thai control.
- Foreigners cannot purchase land directly, another measure meant to guard the sovereignty of Thailand.
- The maximum a foreigner is allowed to purchase leasehold property is 30 years under Thai law, although extensions can be offered
- Loans must be repaid by the time the borrower is 60 or 70 years old, depending upon the lending institution (usually 60)
- Your monthly income should be 3x your monthly loan repayment
- Some lenders may require the borrower has a 1 year work permit in Thailand
Which Lenders Should You Work With?
A number of pan-Asian international banks are good choices for taking a mortgage out on a property in Thailand. These include the Bank of China, ICBC, and UOB as the main lenders, with smaller private organizations such as the MBK Group also lending to foreigners. Funds come through Singapore, while applications should be submitted in Bangkok. Some things to keep in mind are:
- Loans usually are 10 to 20 years
- LTV (loan to value) rates are about 70% of the purchase price
- Minimum down payments should be about 30%
- Interest rates are around 6%
- A number of different loan types are available, from fixed rate loans to interest only loans to variable rate loans with low introductory rates. Do your research when deciding what’s right for you
The Final Word
For too long, myths about the impossibility of purchasing property in Thailand have prevented too many people from even looking into the possibility. Fortunately, these myths are largely based on nothing but hot air, with the Thai real estate market being more open to foreign investment and purchase than it has ever been before. Still, there are a number of roadblocks to navigate when exploring the market, and it’s best not to go at it alone. For a free consultation and help with every step of the process, from initial interest to final signature, contact Crossborder today.