by Tim Whiteley & Jerry Dingley
Over the last 20 years there have been several periods when loans were accessible to foreigners wishing to buy property in Thailand. Overseas foreign currency loans are now available again for those seeking to buy a place in the Land of Smiles, as long as it is a condominium in a pre-defined location that is.
It has always been difficult to obtain a residential mortgage loan in Thailand as a foreigner, and what offerings there were seemed to come and go with the winds of political change in the banking sector and the various overseas financial crises of the last decade.
Lending to foreigners buying property in Malaysia and Singapore has long been available, so it is good to see some Thai banks providing loans in the market again. There are currently two major banks with overseas branches publishing loan offering guidelines to non-Thais looking to acquire freehold condominiums in a number of locations throughout the Kingdom.
In the interests of brevity and to keep this article succinct and to the point, we have put together the general loan parameters and application guidelines as they have been made available to us, together with our opinion on viability.
– Foreigners aged between 21 and 65 years (at the end of the loan period)
– Minimum and verifiable income of USD60,000 or *SGD72,000 per annum for those with a work permit in Thailand and USD85,000 or SGD100,000 per annum for ‘other’ foreigners resident or not resident in Thailand.
Property Types and Location
– Freehold condominiums only with a valuation exceeding 3 million baht
– For property located in Bangkok, Cha-Am, Hua Hin, Koh Samui, Phuket, or Pattaya.
– Up to 70 percent loan to value for property in Bangkok situated within a 2 km radius from the BTS / Airport Link / BRT mass transit stations, and up to 60 percent loan to value for property in other pre-specified areas.
The term is between 3 and 20 years, with a maximum loan amount of THB 35,000,000.
*Note that the loan currency must be in Singapore or US dollars only in order to comply with foreign currency inward remittance regulations and the property law as it applies to non – Thais.
Interested parties should be aware that there are a plethora of associated costs that have been tacked onto these offerings. We note early repayment penalties, high set-up and processing costs, cancellation fees, registration fees, the bank’s legal costs, valuation fees, plus fire and mortgage protection insurance premiums. In addition, with loan interest rates set between 6 and 7 percent per annum, this is anything but a low-cost loan proposition.
The key to a successful application is being able to verify a suitable level of income and it is worth spending time to evaluate the likelihood of an approval being granted prior to submitting the required paperwork.
Our opinion is that there is a place in the market for loans to foreigners on these terms, but one should be fully aware of the conditions and inherent cross-currency risk involved in borrowing a different currency to that of one’s income and / or capital base.
Overall, however, this is a very welcome development, especially in the current economic climate, and is a viable way to purchase a higher-end condominium in Thailand without tying up too much capital to do so.
Jerry Dingley and Tim Whiteley are based in SE Asia and have a combined 50 years of experience advising expatriates and international investors. Specialist areas include wealth protection services, offshore trusts, inheritance and beneficiary planning, QROPS UK Pension transfers and creating tailor-made investment solutions for individuals around the world. [email protected]
Important Note – This article contains general information only and is not intended to be taken as specific financial advisory, investment, or tax advice. A personal analysis should be obtained before acting or refraining from acting upon any information given.