LTV Insanity with Thai Mortgage Application

[Snugs08]

Here's the background:

Based on purchase price of the house and the proposed amount of down payment, our LTV is about 78.4%, and we can probably take this to 75% it's if difference between getting the mortgage or not, the lender conditions for the mortgage in our circumstances are maximum 90% LTV (one bank it's actually 95% apparently). Logically a higher down payment would result in greater probability of sailing through the underwriting process (hold the beer on that) - other conditions like salary, disposable income, affordability, existing debt obligations, bank statements, national credit check, HR salary reference, all satisfied and beyond - we are fine on all that - that initial soft assessment you'd get approved no problem,  and of course despite hard negotiations I expect the bank's valuation to be possibly a little more conservative than the sale price we eventually settled on after some lets say frank negotiations - I am realistic here and not new to buying houses in countries with transparent mortgage processes. Fwiw, this is a Thai mortgage, wife name only, affordability on her earnings - my visibility is limited and layered by translations.

 

Here's the question:

Can someone explain the most recent insanity in our interactions, we go to complete the forms at the banks and my head nearly exploded from all illogical non-sense and this happened at two banks - albeit in the same shopping center.

 

The first clerk told us to borrow more money - we should borrow 90% of purchase price to get accepted - I explained that I think somchai has got confused - I asked him if he's new - it's a maximum of 90% LTV not exactly 90% or minimum 90% -  a lot of back and forth for what seemed like eternity in Thai and it was revealed that the underwriters usually don't grant the full amount - I explained that I understand this, I expect this actually, but it should be mute with the downpayment that can only swing the LTV so much and certainly wont break the mortgage lender LTV maximum, and heck if the valuator discounts more than 11.6% then I'd probably re-think everything and walk away from deal anyway (valuation fee gone, thanks for the red flag).. We have a buffer in valuation of 11.6%+. More back and forth and the wife say maybe also because my salary we have to borrow more, hmm yeah, no logical there, no response to that one..    Or maybe they only discount valuation a certain amount of best put it higher anyway..

 

We then go across to another bank we had on the radar, confidently saying to wife these will have a better idea, and their clerk says almost the same thing, we should borrow about another 600k more than we want to ensure we get the amount we want? I don't understand what they are proposing here - ask the developer to inflate the sale price? - reduce the downpayment? - they said they'll sort that with developer - whats the logic in this with such comfortable down-payment to cover any valuation disagreements? 

 

Here's my assessment:

This shopping center banks usually deals with first-time mortgages at 95%+ or in some cases 100%+, they said many don't get approved, accepting BOT regulations regarding maximum LTV, and workaround by working with the developer to inflate the sale price (they actually don't have to do anything illegal here as most are mickey mouse discounted 20%+ and then the real discounts). 

 

My theory is they don't really see how a thing like downpayment affect LTV and underwriter criteria. They don't really understand their product and underwriting motivations. They just had more success doing it this way and its propagated at the food court to do it this way. I know someone is going to say "you think you know better" but find me some logic and ill step down on this..

 

My situation:

Wifey wants to accept the advice of clerks and follow their recommendations.  I worry this will raise more red flag than it helps.

 

I say we should stick it through on original amounts with no fannying about with purchase price and an underwriter with a brain at HQ once the valuation has come back will approve it, if not we can lower our LTV a little, instead of going illogical the other way and increasing our LTV.

 

Thoughts?

 

Short: Bank says best to have high LTV - say 90% to get approved, when we started at 78.6%. Wife says follow bank. I say don't and once past the first layer - the clerks submitting to head office - it will be fine.  Torn between which approach.

 

"You don't understand Thailand"

 

 

[Celsius]

First of all, did you buy used or new?

[Snugs08]

2 minutes ago, Celsius said:

First of all, did you buy used or new?

New. Built already and ready to go - not pre-plan.

[Celsius]

Just now, Snugs08 said:

New. Built already and ready to go - not pre-plan.

 

From developer, right? They usually have a list of brokers they deal with.  I suggest you visit another branch. Wife should know a friend of a friend who works for a bank. Wife is selling a condo and it sounds exactly like what buyers are going through. The property being new, you should be getting a much better "deal". Most will even do 100% LTV.

 

On that note, are you sure there is no some "special promotion" where they offer like 2 years mortgage "free" or some other similar "free" perk. These are usually not free, but actually added to your loan. 

[Snugs08]

13 minutes ago, Celsius said:

 

From developer, right? They usually have a list of brokers they deal with.  I suggest you visit another branch. Wife should know a friend of a friend who works for a bank. Wife is selling a condo and it sounds exactly like what buyers are going through. The property being new, you should be getting a much better "deal". Most will even do 100% LTV.

 

On that note, are you sure there is no some "special promotion" where they offer like 2 years mortgage "free" or some other similar "free" perk. These are usually not free, but actually added to your loan. 

 

Yes this true, developer won't deal with all the banks, so I understand usually they sort out it all out with their preferred partners, we're taking a dual approach with 2 applications on our own - one comes back prior to 3k valuation fee with 'its a go and here's your rates' and I believe the other we have to pony up the 3k, one of the banks we've approach directly the developer declined to be involved "too slow too many problem" ???? - I think I understand their contempt for this bank.  I am aware most new developers can circumvent BOT (Bank Of Thailand - central bank) guidelines/regs to get close to 100%, and one super popular developer was close to 120% with a big bag of cash for us at the end, however I actually want to do some downpayment (maybe this can be reduced though from original plans) as we won't be able to overpay into the mortgage in the first 3 years without penalty and even super promo rates all have EIR > 3.25% 1-3yr. I suspect as well the loan proposals the developer comes back with might suffer same overflating with added insurance, fees, etc... etc... hoping to get them back today or tomorrow

 

 

At this stage I just want to understand why the bank clerks seem to be insisting on more exposure to risk to get approved, raise your LTV, not lower it, seems counter intuitive to all logic

 

 

 

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[Henryford]

Just borrow 90% and reduce your deposit. Keep the balance in the bank. Sorted.

[couchpotato]

To OP;

Why are you telling us all this confusing nonsense.

You haven't really asked a question, and it is out of the scope of most people to even judge your circumstances.

Only you can work out a solution to this.

 

[Snugs08]

12 minutes ago, Henryford said:

Just borrow 90% and reduce your deposit. Keep the balance in the bank. Sorted.

That's fine if it works (doesnt red flag later) and as simple as that - it may very well be, but it wasn't 100% clear if it reduced the down-payment only, seemed to be some indication of increasing the purchase price (perhaps misunderstood), and something about the contract reflecting - just checked - actually the downpayment is noted in the contract ( so perhaps that all that needs changing afterall).  If it's like you said then I'm happy.

 

Still would like to understand the motivations here though...

[Snugs08]

4 minutes ago, couchpotato said:

To OP;

Why are you telling us all this confusing nonsense.

You haven't really asked a question, and it is out of the scope of most people to even judge your circumstances.

Only you can work out a solution to this.

 

 

I'm asking because on real-estate forum it's very likely someone, perhaps more than one, has gone through  this process recently, and experience the same confusion... Indeed it is confusing.

 

To make it clearer/simple: Why would a bank clerk (two of them in different banks) suggest a higher LTV than a lower LTV for getting approved on simple mortgage on a new property? (lengthy "confusing nonsense" details in the first post if relevant)