The majority of buyers require the assistance of financial lending to purchase a property. Even investors with a hefty lump sum are likely to call on the services of a bank to borrow funds to buy a property in excess of their budget. This is often a sound investment strategy as it will future-proof their asset eradicating moving-related costs that are incurred when homeowners upsize.
Buyers apply for a home loan from a bank and since Thailand has become a magnet for foreign investors, the banks have become more open to lending to non-residents. Products geared towards this segment were launched with UOB and Bangkok Bank leading the way.
Over the years more banks have jumped on board and now ICBC offers loans to investors from China, Hong Kong, and Macau as well as MBK Guarantee that falls under the umbrella of the sprawling Bangkok shopping mall of the same name.
Whilst the good news is that overseas investors looking to dabble in the Thai property market do not have to possess a work permit, investors are subject to slightly less favourable conditions. These more stringent measures include typically higher interest rates, shorter lending terms, restrictions on the type and location of the property purchase and less attractive loan to value rates.
This is not that surprising considering banks could argue that lending for an overseas property or to a non-resident is a riskier business model.
Foreigners with a Thai spouse can bypass this with the possibility to acquire lending with a joint mortgage application. Alternatively, their spouse can act as their guarantor. Thai banks do not openly advertise these serviced but it does allow the borrower a larger pool of products to choose from, resulting in more competitive lending rates.
Foreigners going down this path will, however, need to prove their status in the country, illustrating their income and holding a valid work permit. Their Thai spouse will need to prove they are financially stable, have a good credit rating and a sufficient income to borrow against the loan.
For foreigners wanting to secure a Thai home loan, the advice is to research, shop around and contact the banks directly. Be prepared for a thorough analysis of your finances and save the biggest deposit as possible to reduce any inflated home loan fees.
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