Foreign Buyer Guide: Property Mortgage Loans in Thailand

Thailand’s dynamic economy and desirable lifestyle has made the country a prime investment destination in South East Asia. In recent years, locations such as Bangkok, Pattaya and Phuket have experienced a surge in foreign buyers especially from China, Hong Kong and Singapore.

 

 

However, despite the Country’s relatively progressive foreign property ownership laws, Thai banks and lending institutions have made only limited attempts to offer mortgage options to foreign investors and homebuyers.

This guide will offer practical insight into financing options for both expats living in Thailand and international buyers!


Can Foreigners get Mortgages in Thailand?

 

The short answer:

“Yes, foreigner buyers can get access to property financing in Thailand.”

Since the mid-2000 Thai Banks have tried to capitalize on Thailand’s growing popularity as an international property investment destination. With early entrants, such as Bangkok Bank and UOB initially providing a limited range of mortgage products.

These days, foreigners have access to a slightly larger selection of mortgages from a relatively wider choice of lenders. However, access to these financial products still remains severely restricted and loan conditions imposed are generally less favorable than local buyers.

Foreign buyers intent on seeking financing, should be aware that both loan-to-value (LTV) and interest rates are generally significantly higher than Thai rates. Also, payback period is usually much shorter than those offered to Thai buyers; making it an uncompetitive proposition for most potential buyers.

Should Foreigners Consider Property Financing in Thailand?

The answer to this question, comes down to the buyer’s personal situation:

-Investors, especially those looking for a buy-to-let property will quickly find that the stringent financing conditions, severely reduces investment returns making it an unattractive proposition.

-However, expat homebuyers looking to settle down in Thailand with a long-term holding period (I.e. 5 Years+) and stable income not related to the property, may find that a mortgage is a convenient way to save on rent and own a home.

Obviously, the case studies above make very broad and stereotypical assumptions. However, from experience, homebuyers benefit the most from foreigner mortgages as they are able to reconcile stringent borrowing conditions and personal finances!

Mortgages to Foreigners Without Thai Permanent Residence or Work Permit?

 

A frequently asked question from foreign buyers:

“Can I get a mortgage without working in Thailand?”

The short answer is yes, it is possible to get access to financing without a Thai Work Permit or Permanent Residence. However, eligibility and choice of mortgage providers is very limited in Thailand.

The options are usually as follows:

-Offshore Mortgages
Some international banks with local subsidiaries or satellite offices in Thailand, offer the option to apply for a loan overseas for the purchase of a property locally. However, this is offered to a very limited group of buyers usually from the Bank’s country of origin. (I.e. UOB a Singaporean bank offers financing options to Singaporeans and Malaysians)

-Local “Thai” Mortgages
The major player in this market “MBK Guarantee” offers financing options to international investors using the Thai property as collateral.

From obvious reasons associated to the lender’s risk, mortgage products offered to foreigners with no work permit are less competitive than local Thais.

Thai Banks and Lending Institutions Providing Mortgages to Foreigners

 

As previously mentioned, the choice of loan providers actively offering financing remains limited. At present the main lenders are as follows:

Banks:
– United Overseas Bank (UOB)
– Industrial and Commercial Bank of China (ICBC)
– Thai Retail Banks (On Application)*

Lending Institutions:
– MBK Guarantee

*It is important to note that foreigners with Thai spouses, may be able to access Thai mortgage products via “joint-mortgages” or as a “Guarantor” with their partners, through the large retail banks.

More information about each lender is provided in the sections below.

United Overseas Bank (UOB)

UOB is one of the early entrants in the foreigner mortgage market, it initially setup this service to capitalize on the growing demand from Singaporean buyers for property in Thailand. The bank usually prioritizes buyers from its country of origin notably Singapore and Malaysia.

UOB General Mortgage Terms and Conditions:
– Available for Property in Bangkok or select upcountry locations.
– Available for Investment or residential property purposes.
– Principal up to 70% of the purchase price.
– Loan in Singapore Dollars (SGD) or American Dollars (USD).
– Mortgage term up to 30 years.

Readers can visit the bank’s website for more information about UOB “International Property Loans”.

Industrial and Commercial Bank of China (ICBC)

Relative newcomers in this industry, ICBC the Chinese institution has recently started to offer mortgage products to service increasing demand from Thai property from Chinese, Hong Kong and Macau buyers. It therefore prioritizes applications from buyers originating from Mainland China and its Special Administrative Regions.

ICBC General Mortgage Terms and Conditions:
– Available for main Thai Cities and/or Provinces. (I.e. Bangkok, Pattaya and Phuket)
– Available for investment or residential property purposes.
– Principal up to 70% of the purchase price.
– Loan in Singapore Dollars (SGD).
– Mortgage term up to 3-15 years.

Readers can visit the bank’s website for more information about ICBC’s “Foreigner Housing Unfunded Financing”.

MBK Guarantee

MBK Guarantee is a mortgage service by the operators of the famous MBK Shopping Mall in Bangkok. The lending institution launched in 2008 and is now an established local player in the foreigner financing market.

They offer the most flexible eligibility conditions, with no requirement for a Thai Work Permit or Permanent Residence. Compared to UOB and ICBC they are also more flexible with the international buyer’s nationality. This flexibility unfortunately means higher interest repayment rates and shorter loan terms.

MBK Guarantee General Mortgage Terms and Conditions:
– Available for Bangkok and key resort provinces (I.e. Pattaya, Phuket)
– Available for investment or residential property purposes.
– Mortgages for both condo projects and landed property (I.e. Villas)
– Principal up to 50% of independent valuation.
– Local loan in Thai Baht
– Mortgage term up to 1-10 years.

Readers can visit the lender’s website for more information about MBK Guarantee’s “Condo Loans and Kai Faak Loans”.

Thai Retail Banks

While not publicly advertised, the large Thai retail banks do offer “joint-mortgage” products to foreign buyers married to Thai nationals. Or as an alternative option, some Banks also offer indirect access to financing by lending to the Thai spouse and allowing the foreigner to act as a “Guarantor”.

These arrangements effectively allow foreign buyers to get access to relatively competitive lending rates and conditions. However, in most cases the foreign buyer will need to have an established record as a working professional in the Kingdom!

This means having a Thai Work Permit and proof of income originating from an established Thai company (Usually for an uninterrupted period of 1-2 Years). It is important to note that the Thai spouse, will also need to be a working professional as Thai Banks are essentially loaning based on the Thai national’s credit profile.

Foreign buyers are advised to inquire with retail banks directly, preferably at the bank’s head office. From experience, access to loans in this manner have been arbitrarily offered and conditions can vary greatly between lenders on an individual case-by-case basis!

The Future of Foreigner Mortgages in Thailand

 

Thailand’s continued and growing appeal as an investment destination is gradually shifting market standards and opening financing options for foreign buyers.

While most local Thai Banks have remained conservative with their mortgage requirements and approval standards, the Thai mortgage market could soon experience competition from international banks. These institutions are starting to offer offshore loans to investors from their home country.

Another significant development is the expansion of overseas subsidiaries of Thai Banks such as Kbank and Bangkok Bank in markets such as Hong Kong and China.

These international mortgage products would mean that international buyers could in effect use assets and/or income from their country of origin as collateral (Collateral Mortgage).

Final Words: Buying Property in Thailand

 

Residential property financing options are likely to remain fairly limited in the years to come. Potential homebuyers and investors are advised to inquire directly with lending institutions to confirm their eligibility.

In most cases, mortgage approval for foreigners is done on a case-by-case basis with no guarantees; applications are based on the applicant’s personal finances and circumstances. The limited nature of financing in Thailand, means that most property acquisitions by foreigners are made upfront in cash.

The fact that most foreigners in Thailand are cash buyers is a unique demonstration of the Kingdom’s unique appeal as a desirable investment location in South East Asia!

Fresh Editorial

The Editorial Team is made up of Property Professionals with years of experience in the Bangkok Property Industry. Articles and reports are drafted using first-hand experience and local expertise!

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