Financing a property in Thailand
First, this needs to be said! Financing a property here in The Kingdom can be quite of a challenge and many times it is a disappointing process. There is also probably more to this article as we can only talk for Prachuap Khiri Khan and The Phetchaburi Province where we work, but it seems to be the same all over the kingdom.
Thai Bank Finance.
It helps to be close to a bank manager or high ranked staff as it saves you a lot of problems. You can talk to them and ask what kind of price range you can look for before you even bother to see properties. With this said, it’s no use for a normal foreigner on O Visa to walk into the bank and get a mortgage. You need a Thai partner that is applying and you as a foreigner is just part of the bank’s guarantee. Read also this article about Thai and Foreigner buying together.
Now the banks give you an estimated figure you can look for your dream home and pay a deposit. Ask us how it is done as we have a special of-the-record deposit system with homes going to be mortgaged.
The bank will ask for all kinds of documents and most surely you will need to go back to the back many times. Most sellers will not let you have all these documents needed without a reservation deposit.
The criterias are high and demanding and there are fees and probably you will be told to sign up for an expensive insurance and the process will take long time, maybe 30-60 days.
The interest rate is much higher than in the Western world, 7-8% is not unusual and the first down payment is around 25%. They need to see your income statement from at least 2 years back and you need to have a good and regular salary.
You will on the transfer day, bring your bank person to the Land Office and you will get the original title, but it will say on the back that it’s under a mortgage so you can’t sell the property if the bank is not there with you.
Bank in your home country.
This can be a good way to finance your dream in Thailand but you need something in your home country to be the bank’s safety.
Developer Finance.
Some few developers can offer some kind of down payment on new properties. It can be from 1 to about 4 years and sometime with a interest of 5%. Normally you will pay 50% down first and then monthly. The downside of this is that you will not get the property transferred to your name until it’s fully paid, so try to pay off your debt as fast as possible. So if the developer gets bankrupt or something happens with you so you can’t fulfil your commitment, you have most surely lost all invested money, maybe with an excellent lawyer you can get it back.
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Private loans
There are some other ways in the kingdom to finance your property dream and it’s about borrowing money from private people that use your Title deed as safety often to very high monthly interest like 2% a month. Don’t do it!
Kai Faak.
The same as a Private Loan, but here you make the deal in the local land office. Interest is normally lower but still very high and you can keep your original title, but on the back it says that it’s under Kai Faak and needs to be cleared before you can sell.
Finance companies.
Now and then I get approached by Private big finance companies offering Loans with your property as a safety with most normal interest rates. Its sounds good and ok but I do not have the experience so I will not warn nor recommend this way of finance. If you want me to send you some info, I got myself just send me an email: robinhhpa94@gmail.com