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Mortgages for foreigners available again

Over the past 20 years there have been a few periods when loans have been accessible to foreigners wishing to buy property in Thailand. Such offerings came and went almost unnoticed with the winds of political change in the domestic banking sector, and in any event were made available only for relatively short periods of time. It would now appear that overseas foreign currency loans are available again for those looking for a place to call their own in the Land of Smiles – as long as it is a condominium in a specified location. Lending to expatriates buying property in Malaysia and Singapore has long been an option so it is good to see some Thai banks providing loans again and there are currently two major institutions with overseas branches publishing guidelines to non-Thais wishing to acquire freehold condominiums here. In the interests of brevity and to keep this article succinct, we have put together only the general loan parameters and application guidelines as they have been made available to us. Eligibility Foreigners aged between 21 and 65 years at the end of the loan period. Minimum and verifiable income of US$60,000 or S$72,000 per annum for those with a work permit in Thailand and US$85,000 or S$100,000 per annum for ‘other’ foreigners resident or not resident in Thailand. Property Types and Location Freehold condominiums with a valuation exceeding B3 million. Property to be located in Bangkok, Cha’am, Hua Hin, Koh Samui, Phuket, or Pattaya. Loan Amount Up to 70 per cent loan to value for property in Bangkok situated within a two-kilometre radius of the BTS, Airport Link or MRT stations, and up to 60 per cent loan to value for property that is located in the other specified areas. Loan Tenor The term is between three and 20 years, with a maximum loan amount of B35 million. The loan currency may be in Singapore or US Dollars only, in order to comply with foreign currency inward remittance regulations and the property law as it applies to non-Thais: for a foreigner to acquire a freehold title the funds used to buy it must originate from overseas and in a foreign currency amount that is then converted to Baht on arrival. Interested parties should be aware that there are many associated costs tacked onto these offerings, some perhaps as a result of limited competition. Among these are penalties for early repayment; fees for set-up, processing, cancellation, registration and valuation, the bank’s legal costs, plus fire and mortgage protection insurance premiums. All have to be paid in advance. In addition, with loan interest rates set at between 6 and 7 per cent a year this is anything but a low-cost loan proposition and viability should therefore be carefully assessed before application. It is probably fair to say that with the costs involved – some of which are applied on a fixed rather than a percentage basis – that it is not worth considering the mortgages offered for loans of less than B10 million, which at 70 per cent loan-to-value equates to a property purchase of something over B14 million. There is a place in the market for loans to foreigners on these terms but potential borrowers should be fully aware of the fees and especially the inherent currency risk involved in borrowing in a different currency to that of one’s income and/or capital base. Overall, however this is certainly a welcome development, especially in the current economic climate, and is one way for an expatriate foreigner to buy a condominium in Thailand without tying up too much capital to do so. By Jerry Dingley & Time Whiteley