Local Financial Services for Foreigners in ThailandJan 20, 2010
Foreign property acquisition remains a heavily controlled area of activity in Thailand in view of the various restrictions and limitations imposed upon foreign property investors. Despite the growing foreign demand for real property most of the difficulties faced by foreign investors have been due mostly to the lack of effective local financing resources. In response to this trend, local banking institutions have recently began to provide limited financial assistance. As a result, an overview of the most common and important requirements set by local banking institutions is imperative for a successful financial application.
The availability of a loan arrangement depends on the kind of property to be acquired. Access to financial services for the purchase of Thailand Condominium units is relatively easier. On the other hand, loans for housing purposes are available only to Thai individuals or companies as provided by just a handful of local banks. In addition, no loans are advanced in order to finance properties held under leasehold as banks have yet provide this service.
Aside from these, the maximum amount that a bank can furnish usually extends up to seventy percent (70%) of the purchase price. Note that every bank has their own mode of property valuation hence every applicant should be aware of a potential variance in the amount a loan would provide. Furthermore, the amount of a loan accommodation usually ranges from one hundred thousand (100,000 USD) to eight million dollars (8,000,000 USD) depending on the bank. Moreover, the total loan term and age of the applicant must not exceed sixty (60) years except in certain rare instances extending up to sixty-five (65). Furthermore, the usual payback period lasts for five (5) years while some banks have adopted the policy of requiring a minimum of seven (7) years. Additionally, it is required that an applicant have a monthly salary amounting to three (3) times the amount of a monthly instalment. Also, any loan applicant will have to undergo a comprehensive credit check in order to guarantee that the applicant has the capacity to remain in sound financial condition.
Aside from these, foreign applicants are also required to exhibit the following documents as prerequisites for the extension of any financial assistance:
- A work permit existing for at least one (1) year depending on the bank or a Thai resident permit;
- A documented salary including pay stubs and bank records for at least one (1) year depending again on the bank applied;
- A copy of the passport including the visa page;
- An ID card or government official ID card;
- House registration certificate and
- Marriage certificate if applicable.
Interest on loans usually extended to foreigners amount to eight point seventy five percent (8.75%) and are set at prime plus point five percent (.5%). Some banks use different rates depending on the type of currency loaned.
In mortgaging the land purchased as a means of security, the provisions of the Civil and Commercial Code require the following:
- The borrower must have a right of ownership over the property;
- The contract must be in writing and registered by a competent official in the proper office and
- It must contain a statement, in Thai currency, of either the sum or a maximum amount for which the mortgaged property was assigned as security.
In conclusion, any attempt on the part of foreigners to procure a loan from local banking and financial institutions will encounter restrictions and limitations that can, with proper preparation and information be resolved with ease.