It is not uncommon for foreigners to buy a condominium in Thailand, but so far it has been quite difficult for them to seek a mortgage.
That is set to change.
Expats who want to own condominiums in Thailand can now ask for mortgages through Bangkok Bank's Singapore branch, but the initial process can be done at branches in Thailand. Bangkok Bank (BBL) is the only bank offering such a facility to foreigners.
Under the current law, foreigners are not allowed to own land but they can own a condominium if not more than 49 per cent of the units are foreign owned. For example, if there are 100 units in a condominium project, only 49 units can be sold to foreigners.
However, the Bank of Thailand (BOT) does not allow banks in Thailand to lend directly to foreigners. Expatriates wanting to own a condominium have had to transfer their money from overseas, or save in order to buy, which may take a long time and waste money on rental costs before they can get their new homes.
BBL requires borrowers to buy homes priced at least US$300,000 (Bt9.64 million) or equivalent, while offering a credit line of around 70 per cent of the price but not lower than $200,000 or equivalent.
Loans will be given in three currencies, US dollars, Singapore dollars, and euros.
The mortgage rates depend on the currency. They are: US dollars - prime lending rate (5.0 per cent) plus 1.5 per cent per annum, or 6.5 per cent; Singapore dollars - prime lending rate (6 per cent) plus 1.5 per cent, or 7.5 per cent; and euros - prime lending rate (6.5 per cent) plus 1.5 per cent, or 8 per cent. These rates are as of last Monday.
The maximum term of a loan is 20 years but the term plus the borrower's age shall not be over 65 years.
Because lending to foreigners involves high risk and there are few competitors, the bank cannot lend more than 70 per cent of the purchase price.
The bank also needs to quote floating interest rates, while the property asset will be pledged as loan collateral.
Borrowers also have to pay $2,000 in front-end fees, which are payable in two stages.
There is a non-refundable $200 fee when submitting a loan application, and the remaining $1,800 is to be paid when the letter of offer is accepted.
If there are any amendments after loan approval, the borrowers must pay $120. There are also prepayment fees, which are charged at 1.5 per cent of the prepaid amount and a cancellation fee, which is charged at 1.5 per cent of the loan approval amount.
Other expenses, including legal costs, valuation fees, fire insurance premiums and others must also be paid by borrowers. Documents required are a completed mortgage loan application form; copy of identification card (front and back) or the essential pages of the passport; signed copy of sales and purchase agreement or reserve agreement; a bank's reference letter addressed to BBL to confirm the banking relationship and type of account, size of loan and deposits with the bank; the last six months' bank statements; and a credit bureau report from the country of residence.
Individuals earning a monthly salary need an employer's letter addressed to BBL, confirming position, period of experience, and remuneration; income tax returns from the last two years; the last six months' computerised pay-slips; and a work permit for those working in Thailand.
Self-employed individuals need the last two years' balance sheets as well as a profit and loss statement and the last two years' income tax returns.
Foreigners looking for a second home and who are interested in this mortgage can ask for more information at the bank's head office.
Everything will be done in Thailand through BBL's cooperation with its branch in Singapore. If all required documents are submitted correctly, the approval process may take only two weeks. Customers do not need to travel to Singapore as the bank will process the application.