A guidance to home financing in Thailand
Home financing Thailand
If you’re foreigners and looking for financial leverage to purchase property in Thailand, there are few options.
As you may know, Thai local banks don’t finance foreigners to purchase real estate in Thailand, unless they have the status of permanent resident.The main reason is to get freehold ownership in Thailand,foreigners must transfer the full amount in foreign currency.
OFFSHORE LOAN VIA BANK BASED IN THAILAND
There are few banks based in Thailand that provide home financing to foreigners via their branches oversea. The most known is UOB but the loan is restricted to expatriates living in ASEAN. With UOB you can loan either in USD or SGD, up to 70% of the appraisal value of the property.
A recently new comers, the Chinese bank ICBC, provide foreigner home financing via their branch in Singapore. You can loan up to 50% of the appraisal value for a maximum tenure of 15 years (standard 10 years). All nationalities can apply for a loan and non resident are accepted. Land appraisal value include furniture as well, not only the structure.
An offshore loan via a bank based in Thailand is a good option as all can be done via Thailand and they know better the local real estate market, so process usually faster. Anyway, it’s still long process and it will take from 40 to 90 days from application to financing.
OFFSHORE FROM YOUR COUNTRY OF ORIGIN OR RESIDENCE
Financing a property in Thailand via a bank in your home country can be an alternative. Usually, foreign bank with no retail branch in Thailand will not loan easily for a property oversea. In general, they will take as a collateral an asset in a country when the loan is approved. Typical collateral assets (mortgage of a property, financial asset as life insurance…).
PRIVATE FINANCING WITH LOCAL INSTITUTIONS
Private financing can be an options but have to clearly check the background and professionalism of the financers. Some instituations backed by bank provide this kind of financing in Thailand. The most important is MBK Financial services which provide loan to foreigners.
This kind of financing can be an option for short tenure, and smaller amount. But interest rates are generally more high. Advantage is you can loan in Thai baht so it’s avoid problem of currency exchange.
DEVELOPER OR LANDLORD FINANCING
Some developers or landlord to ease the sale provide some financing with varying interest. Usually it will be for period up to 5 years.
This can be an option, as the interest rates can be negotiated, the approval is fast. As well, the developer financing can be done off-plan so you combine payments conditions with loan financing in this case. All the other options usually require that the property is ready to be transferred, off-plan projects are not accepted, just per-approved but with no final guarantee upon completion.
Things you must know with offshore loan financing
Last but not least, when you borrow in a foreign currency, you have to take a look at he currency fluctuations between the local one (Thai baht) and the base currency of the loan. In some case, if the Thai baht appreciate it’s quite good for you, but in the other case, you may have some financial impact.
Mostly interest rates are not fixed, or only a short limited period. Even yo borrow from Singapore, don’t expect to get the same interest rates that to purchase a property in Singapore.