Thai banks are just beginning to evaluate foreigners, not as a credit risk, but as an investment opportunity and mortgages in Thailand are gradually increasing in availability.
Recently a new branch of the Bangkok Bank (BBL) has opened in Singapore and now finances sometimes as much as 70% over 20 years for property purchase. This has opened up borrowing possibilities for property investment in Thailand. Loans can be in Euros, US Dollars or Singapore Dollars, with interest rates varying in accordance with your choice of currency.
HSBC in Thailand offers loans of between 1,500,000 and 35,000,000 Thai Baht. Typically they will lend up to 80% of the purchase price and interest rates can be fixed for up to three years.
For condo purchases, many investors still obtain a loan in their country of origin and then transfer funds via currency exchange deals to a Thai bank account, while some well-known developments offer finance options of 70%, which are also well worth considering.
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Prices here remain far below those in the more established European markets, although they are growing quickly and strongly (around 10-15% a year).
Some businesses choose Thailand as a growth market, and a regional base from which to keep their employees working all around Asia.
Completion of the Suvarnabhumi-Bangkok International Airport (SBIA) is is seeing growth in commercial property markets in eastern Bangkok as well as making Thailand even more accessible. Thailand is one of the cheapest places to fly to in Asia.
Property is much cheaper in Thailand than elsewhere and an increase in overseas interest in property purchase has helped to create an economic recovery in Thailand.
Rental potential is great, due to increased government spending luring growing numbers of tourists.
No capital gains tax for private investors, and low ongoing taxes.
Today foreigners are regarded by the government as a big investment opportunity in Thailand.
What can you expect from your mortgage?
Just because the lender owns the legal title doesn't mean they can do anything with the house. Your occupancy is secure and use of the property usually unrestricted - provided you keep up your loan repayments. This last point is essential to your security, and you will see notices in your lender's marketing material pointing out that you could lose your property if you don't maintain your mortgage payments.
Even if you default in your payments the lender will firstly talk with you to see what is going on and if something can be done to solve the problem; it can't just throw you onto the street. If payments remain unpaid and it looks as though this situation will persist, the lender must apply to the court for a possession order to sell the property to recover the amount borrowed; the court must be given full details to enable it to determine if there is a case for issuing the order. This is an action of last resort, and neither the request for, nor the issuing of, a possession order are taken lightly.
What are we talking about?
Just to get it clear at the outset, a mortgage isn't a loan. A mortgage is a legal arrangement whereby someone borrowing money uses something of at least equal value and easily convertible to cash as security. The loan doesn't have to be used to buy a house. Where it is to be used for this purpose, however, it is usual to use the legal title of the house as security for the loan.
Why is it important to get this clear? It's important because a loan to buy a house is by far the largest investment that most of us get to make during our lives, and it is vital that we understand all of the elements relating to the exercise.
Looking for a mortgage for your new home?
Bangkok property Brokers can help guide you through the mortgage process from start to finish. Call us today for more details.