Global Mortgage Finance
(Thailand Property and Land Finance Specialists)
Article 1 - Foreigner Mortgage Finance in Thailand.
If as a Foreigner Investor you wish to purchase property in Thailand, you would most likely have come across several obstacles and difficulties when wanting to raise finance for a purchase. This may have been due to a lack of understanding for Thai language or quite simply, you did not know where to look.
Rules and regulations set out in Thailand limit the amount of options available to foreigners and according to the Bank of Thailand, Thai Banks may not lend to foreign residents but for a few exceptions which in general, these exceptions rule out the large part of buyers.
Freehold Condominiums are the most popular way for a Foreigner to purchase their dream home or investment in Thailand and this avenue comes with Government approval under the Condominium Act. This Act stipulates that up to 49% of a Condominium building area is allowable for foreign resident ownership. In essence, the building is therefore in theory 51% owned by Thailand.
At MBK Guarantee Ltd (Part of the MBK Group PLC, Bangkok), we are pioneering the way forward to allow Foreigner Friendly Finance options to the investors of Thailand Real Estate. Our Group has more than 30 years of experience in Thailand’s tourism industry and therefore is perfectly adapted and positioned to deal with Foreigner requirements. Whether looking to play Golf on one of our courses at Loch Palm Phuket, stay in our hotel “Sheraton Krabi Beach Resort” for a weekend away, sample some rice within our Mahboonkrong brand or quite simply shop til you drop at one of our many shopping centers, our clients are in safe hands.
Successfully concluding THB Loans for several years, our loan contracts/applications are written in both Thai and English with extensive support throughout Thailand. Whether purchasing on the sundrenched island of Phuket, a luxurious top end Penthouse Condo in Bangkok or Investment Opportunity in Pattaya on the Eastern Seaboard, we have all the solutions available for multiple locations.
Possibly a first for Thailand, we allow THB financing for up to 60% of the Purchase price or Valuation (whichever is the lower) and over a maximum tenor of 10 Years. Condominium Interest rates are at Thanachart Bank’s MLR + 2% with a competitive lender arrangement fee of 1.25%. The most noticeable difference is that, since we are not a commercial bank we are not restricted by the Bank of Thailand loan limit of THB 5,000,000 to foreigners and therefore, there is no cap unto the amount of finance we can lend.
Our client base ranges significantly from an overseas resident, to local investors (both Foreigner and Thai) with an extensive property portfolio around Thailand. An investor client will sometimes come to us with a list of Condominium title deeds and ask what finance can be achieved against these units as they were all paid with by cash unknowing to the fact, finance could be made available. MBK Guarantee Ltd has over 100 Condominium buildings already pre-approved where we can effectively tell the client that cash back for “x” amount within a matter of weeks could be achieved. As an investor, this makes for the perfect opportunity to raise cash quick in order to snap up the latest Condo development or Investment opportunity which “could not be missed”.
Land Bank finance is often sought after from our Thai national clients and sometimes involves a local Thai company in order to own the asset. Additional documentation would be required in order to Mortgage which would include full company registration documents & list of shareholders.
Other thought processes to consider here in Thailand could be with regard family protection in the form of life cover. It is often standard that as a family, there will be usually one “bread winner” and if there were to be unforeseen circumstances resulting in death for one of the parties or even total permanent disability, how could the loan installments be met? Working closely with Thanachart/ Prudential Life Insurance, we are pleased to provide a comprehensive service to allow our Foreigner clients the option to take out life protection to cover the balance of our loan. The financial burdens of debt can then be in some ways a small reprisal for such unforeseen circumstances.
Case Study
Client background – Henry is aged 45, lives and works in Hong Kong with his Thai Spouse also aged 45 and often comes to Thailand on a monthly basis for extended weekend breaks along with their 2 children, Annie and Somchai. Living in Thailand prior, to work in Hong Kong, Henry had purchased 2 Thai properties; a house with his Wife on Phuket and a Foreign Freehold Condo in Bangkok. The house and condo are around 10 years old and both could do with some renovation work so Henry decides to release up to 50% of the cash back in order to spend on his home and even include holding a little more little liquid cash just to splash out when next on holiday here.
Luckily, the freehold condo is on our pre-approved list and therefore we can instantly confirm up to a pre-approved THB 50,000 Sq.m. and with the unit’s title deed size reported as 205 Sq.m. we can indicate the loan could be up to THB 10,250,000 repayable over 10 years. As it would be an important factor to have the loan fully repaid in the event of death luckily we can include the life insurance within the premium and all for a slightly higher installment indicative at THB 139,000 per month.
Note: When mortgaging a property in Thailand a further 1.00% & 0.05% is required for Government Land Registration and Stamp duty For further information and enquiry, please feel free to contact stuart@mbk-center.co.th or +66 (0) 81278 5382 and we shall welcome the opportunity to discuss any questions you may have in either Thai or English.
(Published Bangkok Business Brief, 15th May 2013)