FINANCING FOR FOREIGNERS

 

  • There is no general rule applicable to all foreign nationals who want to acquire a property in Thailand.

=> Banks will consider applications on a case-to-case basis

  • Mortgages are common practice in Thailand for Thai nationals.
  • Interest rates are significantly higher than in western countries, in the area of 7-8% for 10-year maturity loans (market average as of end of 2015), which mitigates significantly the interest of 

 

There are 3 main cases:

 

A/ The buyer is a foreigner living and working in Thailand with several years of tax history

With a work permit, a good salary and several years of tax payment, a foreign national residing in Thailand is generally eligible to local financing for property investment, with a loan to value of 30 to 70%, based on the value of the property estimated by the bank (average is near 50%).

Foreigners falling in this category will be asked to provide very similar guarantees as in their home country to obtain a loan. Interest rates are usually variable and turn out to be much higher than for currencies bearing a very low interest rate (USD, EUR, GBP, SGD, etc.), i.e. generally in the area of 8-9%.

Once that said, the combination of high interest rates and attractive purchase prices (compared to Hong Kong, Singapore or Kuala Lumpur) explains why most foreigners living in Thailand still prefer to finance favor full-equity purchases to leveraged purchases. The lack of consistency from the Thai Central Bank and commercial banks in their attempts to open the mortgage market to foreigners – strong differences in conditions applied and short-lasting offers – has been another setback.

 

Thai Banks offering local loans

Bangkok Bank

Bank of Ayudhaya

Kasikorn Bank

Siam Commercial Bank (SCB)

Thai Military Bank (TMB)

Union of Overseas Banks (UOB)

Tisco Bank

Standard Chartered Bank (Thai branch)

 

 

B/ The buyer is a foreigner living outside Thailand

In the early 2000’s, there was no way for a foreigner not residing in Thailand to obtain a mortgage for a property investment in Thailand. And most foreigners residing in Thailand were not eligible to local loans.

In 2005 things started to change after the government announced the objective to promote foreign investment and tourism.

Bangkok Bank, one of the biggest Thai financial institutions, was the first to offer overseas loans to foreigners, either Thai residents or non-residents, through their Singapore branch. Bangkok Bank could offer up to 70% of the property’s value. The two main conditions – which apply to all overseas loans – were:

- Purchase of condominium units only (sole type of property that can be acquired freely by foreigners under the 1992 Condominium Act)

- The property is acquired in the foreigner’s personal name (not in a company’s name)

Bangkok Bank was shortly followed by United Overseas Bank (UOB), which offered similar packages with the same requirements.

As of today, UOB provides the most responsive service for overseas property loans, and also the easiest process, since buyers can apply for a mortgage directly at UOB branches in Thailand. Rates for overseas loans are similar to what applies for local loans.

 

 

C/ The buyer is a foreigner living in Thailand with no or little tax history

Obtaining a local property loan for foreigners who don’t have a work permit in Thailand (retirees, students, inactive people, some entrepreneurs, etc.) is almost impossible.

However, a new actor has been trying to enter the market since 2014 and has communicated intensely to attract foreigner buyers living in Thailand but who are normally not eligible to local loans.

This actor is MBK-Guarantee Co.. It is the very first financial institution to offer mortgages to foreigners through Thai funds. It requires no work permit or not Thai residence, with up to 50% loan to value, for any freehold property purchase.

 

  

CONCLUSION

=> Obtaining a local loan or an overseas loan is possible but subject to tight conditions and high rates. Local loans can only be granted to foreigners with a long tax-payer history, but have seen 2 financial institutions offering overseas loans since 2005 with slightly more flexible conditions.

SPG is willing to offer support to its clients interested in leveraging their investments, however investors must be aware that conditions change constantly and that there is no guarantee of success in the process.

       

                                                       

 

 

 

 

 

 

 

 

 

 

 

PICTURE OF THE AGENCY

CONTACT US

 

 

 

 

 

BUY A CONDOMINIUM (link to condo/apartment for sale)

 

 

 

 

 

 

THE BANGKOK INVESTOR'S VIEW

 

 

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