Mortgages are loans taken to purchase a property, with the property itself acting as the collateral. If the borrower fails to repay the loan, the lender can sell the property to recoup their monies. A mortgage can also be taken to raise money for other purposes, including personal spending and business funding. In this case, the borrower must wholly own the property and use it as collateral for the loan monies disbursed by the lender. Foreigners can borrow against their Thai property. Several Thai banks offer property, personal, and business loans to qualifying foreign borrowers. It is also possible to access financing from overseas banks.
Borrowing in Thailand
For a foreigner to take up a loan in Thailand against property, they must own it. The only property that foreigners can own freehold is condominiums. Not all Thai banks lend to foreigners so you will need to choose from the few that do. The requirements do vary somewhat from bank to bank but for employed foreigners generally include:
- Having a work visa for at least 1 year or a Thai resident permit, evidenced by a copy of passport, visa page, and/or government official ID card
- Good credit rating
- Stable and secure income that is at least three times the monthly loan instalment, proven by payslips and bank statements
- Letter of employment
- Copy of the land or unit title deed, sale and purchase agreements
- Housing registration card
- If borrowing to purchase the property, proof of foreign quota availability will be required
- The maximum loan period in addition to the borrower’s age should not exceed 60 years
The bank may also seek to delve into the stability of the employer by asking for company documents. If the applicant is married, they may also be requested to supply their marriage certificate.
For business owners, the requirements will likely also include:
- Certificate of business registration
- Bank statements
- VAT records
- Net working capital for the last 6 months
The terms of borrowing can be quite strict for foreigners. The interest rates are also often fixed and higher than what you would get if you borrowed from your home country. It is advisable to shop around for the most competitive rate, including considering overseas financing.
For foreigners whose incomes come from abroad, it may be better to seek overseas financing. There are Thai banks based in Singapore that offer international home loans. These include Bangkok Bank and United Overseas Bank (UOB). Bangkok Bank requires the borrower to physically apply for the loan in Singapore while UOB can facilitate borrowing from the Singapore branch while the borrower is in Thailand. Borrowers can borrow up to 70% of the value of their property with the loans available in different currencies. There are also a few other international banks with local subsidiaries in Thailand that can provide similar financing arrangements, as long as the borrower is the registered owner of the property being mortgaged. The borrower can apply for a loan overseas for the purchase of the property locally. Pay attention to whether you will be required to make the repayments in another currency. Exchange rate fluctuations can impact how much you end up repaying. While comparing interest rates, also factor in the cost of processing fees that can also vary from bank to bank. You can likely get a willing lender if you want to borrow against your property in Thailand. It simply depends on whether you can meet their requirements. These terms can vary from bank to bank so take time to shop around or engage a mortgage broker to help.