Can Foreigners Get Home Loans In Thailand?
Buying Property In Thailand: Can Foreigners Get Home Loans In Thailand?
As experienced, professional real estate agents working in Thailand, we often assist foreigners in purchasing houses and condos in and around the Hua Hin area. With the recent slowdown in the world economy, coupled with the strong Thai Baht and on-going trade war between the USA and China, some clients are beginning to look for lending options when purchasing a property in Thailand.
The good news is that there are some options for home loans in Thailand available to foreigners residing in Thailand.
BANKS OFFERING LOANS TO FOREIGN INVESTORS FOR CONDO PURCHASES IN THAILAND
Singaporean bank UOB is a popular option for many buyers who need loans to purchase property in Thailand. UOB has several bank branches throughout Bangkok and offers loan services to foreign investors residing in Thailand (and other countries), but for the purchase of condominium units exclusively.
Several of our clients have used the lending services offered by UOB to secure a loan for the purchase of a condo unit in Hua Hin, Thailand. If you are interested in exploring loan options from one of the Thai UOB branches for the purchase of a condo unit, please contact us for more information about their professional lending services.
BANK QUALIFICATIONS FOR FOREIGNERS APPLYING FOR LOANS TO PURCHASE A CONDO | Condo Home Loans In Thailand
You will need to provide the following documents:
- Document showing you are registered as a legal resident of Thailand;
- Valid passport;
- Current foreigner registration book (Yellow book);
- Current registered address (Blue Book);
- Valid Work Permit;
- Work history for at least 1 year (most banks require up to 2 years work history before approving a loan);
- Letter of Employment or business registration (if self-employed);
- Stable income history earned inside Thailand (typically must show a monthly income 3 x larger than the monthly loan payment installment);
- Paycheck slips, bank statements, tax documents and all other evidence of income earning inside Thailand;
- All title deeds, signed purchase agreement, building permits, condo plans, copies of house book, freehold foreign quota statements, etc on the intended condo unit you intend to purchase.
SELLER FINANCING IN THAILAND: FINDING LENDING OPTIONS TO PURCHASE VILLAS OR FREESTANDING HOMES
Unfortunately, there are no lending options from Thai banks for foreigners intending to purchase a free-standing villa with some land (that we are currently aware of). The most likely reason is that foreigners are not allowed to own land in their own names in Thailand; therefore, the land is never truly owned by a foreigner, but leased from a Thai land owner (who will most likely not co-sign on a home loan).
That said, if a real estate buyer needs to secure a loan for the purchase of a free standing property in Thailand, we usually recommend that the buyer first ask if the seller will consider Seller Financing. Seller Financing is common in the USA real estate market, but this type of lending practice is not so familiar with Europeans and Asians.
Seller Financing is pretty basic: the seller accepts a downpayment (usually somewhere between 30-50% of the sale price), and agrees to receive the balance of the total purchase price via monthly payments. Typically, most Sellers in Thailand will carry a loan for no more than 2-3 years. Loans beyond 3 years are legally required to be registered at the local Land Office and are thus subject to income taxes for the Seller.
In a Seller Financing scenario, it is strongly advised a competent lawyer write up a contract stating the terms and conditions of the sale to ensure that both parties receive what is agreed upon when the contract term ends. In other words, the Buyer receives the Chanote Land Title deed (via a lease contract, a Thai spouse, or as a company asset) and the house documents (blue book) once the loan is paid in full.
The Seller would not transfer ownership of the land nor the house to the Buyer until the property is paid for in full. The Buyer would have the right to occupy the property once the down payment has been made, but ownership transfer would only occur once the balance has been paid in full. It is also common to see a clause in the financing contract that forbids the Buyer from modifying the property while there is an outstanding balance on the loan.
Additionally, it is not uncommon for a Seller to charge an interest rate on the Seller Financing loan. Typically, Sellers will offer a better interest rate than what is offered by the Thai banks, but this rate is generally negotiable between the Buyer and Seller.
Keep in mind, there are risks to both the Seller and Buyer. If the Buyer can’t complete the payment schedule for a loan, a typical financing contract will state that all monies paid to date are forfeit, and the buyer must vacate the property immediately upon official written notice of default. Risks to the Seller include (but are not limited to) removing the property from the real estate market for a significant period of time, likely causing the Seller missed opportunities for a cash sale, potential damages to the property & associated repair costs, legal fees affiliated with the eviction process, outstanding or unpaid utilities, etc.
Additionally, it is common to see builders and developers offer Seller Financing for off-plan construction. If you are interested in building a custom home or purchasing a show house from a local developers, they will often offer a 3 year lending term for a house with 50% payment made by completion of the construction period. (i.e. Golden Sands, Orchid Palm Homes, The Clouds). Add links to listings on our website.
For further information about home builders offering Seller Financing or obtaining home loans in Thailand, please contact us at 085-264-2158 Siam Society Real Estate.