Financing for Farangs to purchase property

[stokiesteve]

Hi all.

I realise financing for property purchases is nearly impossible for us westerners in Thailand. Can I ask your opinions if there was an option to gain secured financing on property purchases here, is it something that expats in HH would be interested in?


Any opinions welcome.

Thanks

Steve.

[Henry 14th]

I believe there are a few independent thai business property people doing something similar. The problem is that you only have a choice of properties within their portfolio. It not a case of securing the funds and buying where you choose.

Pay them a lump sum deposit and then 1/2 % above the standard mortgage rate. I think it has to be done through a Thai wife/girlfriend.

I would be interested in Hearing what you are thinking of offering as we would look into this further if it made sense.


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[stokiesteve]

Thanks for the info Henry. It is a real preliminary inquiry. I have often thought that this is something missing here. I know it is legally possible to attach loans to titles here, I am looking into if it is possible to do it on a commercial basis or if you would need to be accredited in the same way a mortgage provider is. I would expect that to be very difficult to get. Most westerners buy cash, but I'm wondering if financing was an option, would expats consider it. In my eyes I could see numerous advantages to not tying up large amounts of equity into Thai property if it could be avoided.

[Spitfire]

It is possible to get financing through the high street banks here...............

BUT.........

You either have to have a work permit and have had one for so long (length of which is at the banks discretion), be married and she has a reasonable job/income too. The SCB will do it, or used to, but the banks have tightened up recently so not 100% sure. I got financing with my wife 4 years ago and the SCB said they would do 75% and we needed the rest as deposit. If you work overseas then they will still consider it but you have to deposit more.

However, many building developers and their staff will submit/cook the books so as a slightly inflated price is given to the bank for the house allowing you to borrow more and come up with less of a deposit and you get some cash out of it too...which is how they help lots of local Thais buy them.

Not impossible though, if you have some collateral to begin with but you need to be married to a Thai and she needs income too.

[stokiesteve]

Thanks spitfire. Yeah my understanding is it has tightened slightly. I just wonder if those conditions required are government imposed. To me a mortgage provider only needs to be sure the property is correctly valued, there is enough margin for a slump in the price, and the purchaser has some vehicle/ income in place somewhere to make the payments. Generally affordability checks in the UK are designed to protect the person taking out the loan. In the unfortunate event that a property was repossessed, if it was in a saleable area like Hua Hin, I cannot see how the lender could lose. This has me wondering if the strict regulations surrounding loans to non Thais are policy related rather than financial.

[STEVE G]

[quote="stokiesteve]To me a mortgage provider only needs to be sure the property is correctly valued, there is enough margin for a slump in the price, and the purchaser has some vehicle/ income in place somewhere to make the payments..[/quote]

Yes but how can you secure the loan if the borrower isn't legally allowed to own the property?

[stokiesteve]

Yes but how can you secure the loan if the borrower isn't legally allowed to own the

You are correct Steve G. That would need to be addressed. My understanding is that you should not even be able to attach a loan to a title, if the lender is unable to take ownership in the event of a default, eg a Farang lending against land, or a house with land, or even a condo that is not available to foreign ownership.

Any venture of this kind would need to be structured in a way that allows for land ownership. I don't mean random Thai nationals that don't know each other or the company.

[hhfarang]

The foreigner (Thai wife) who bought my home got a bank loan for 130% of the purchase price. He had offers from several different banks and picked the best one. Didn't seem like he had trouble getting it though it did take a couple of months. Two banks actually sent appraisers out to look at the property.

[Dannie Boy]

The foreigner (Thai wife) who bought my home got a bank loan for 130% of the purchase price. He had offers from several different banks and picked the best one. Didn't seem like he had trouble getting it though it did take a couple of months. Two banks actually sent appraisers out to look at the property.

Are you certain it was the foreigner who got the loan and not his Thai wife?

[Nereus]

The foreigner (Thai wife) who bought my home got a bank loan for 130% of the purchase price.

Really? Or have you`all started early on the red wine?

[Big Boy]

I believe that. Our neighbour's mortgage included 500,000 for extras.

[stokiesteve]

I've not heard of 130% loans here before, especially for non Thais.

I am aware that loans are available for westerners if they tick all the boxes. Siam legal lists them as:

At least a 1-year work permit or a Thai resident permit.
A letter of employment indicating their years of service in Thailand and their annual salary.
Pay slips will usually be attached to this as well.
The banks may also request for the employer's company documents
The banks would also conduct credit checks on the foreigner
The applicant's age combined with the loan period must not exceed 60 years.
Applicants must have a stable and secure job.
Applicants must have a fixed income three times higher than each installment repayment.
The aggregate amortization of loan must exceed 7 years (for some banks)

These criteria would probably exclude a huge percentage of expats out here in Thailand, who may be more than able to service a loan but do not have a trackable (or any) work history here.

[hhfarang]

He nor his Thai wife were even living in Thailand when they got the loan, and he never has. The loan may have been in his wife's name but he's the one with the very high paid offshore job... she doesn't work.

[stokiesteve]

Hmmm. Not sure how he managed that. I was told by both Krungsri and Krung Thai banks that a Non Thai spouse's income could not be used for a loan in the Thai wife's name. They said if there was a separation if was nearly impossible for them to chase the non Thai for the debt. Admittedly these banks were in Phetchaburi, not Hua Hin so probably not a frequent issue. I have however not heard of other westerners getting such easy access to finance here though.

[hhfarang]

Oddly enough, the loan this guy ended up getting to buy the house was from a bank in Petchaburi. They don't even have a branch in Hua Hin.