Expats Can Get Condo Loans From Bangkok Bank

[john b good]

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.

You have to borrow at least $200,000 US ! At a current (but floating) interest rate of 6.5%.

The maximum term of a loan is 20 years but the term plus the borrower's age shall not be over 65 years.

So, if you are 45 you can get a 20 year term. If you are 55 you can only get a 10 year mortgage. If you are already 65, forget it.

I expect to have that much in the bank in 4-5 years, and will just pay cash outright rather than buy now and pay all that interest (and end up having to work 4-5 years longer to pay off the mortgage).

Just imagine the kind of trouble you could get into, with a $200,000 mortgage, if the condo market takes a slump (or the dollar takes a nose-dive, or the new/next government changes some rules, etc, etc).

No need to worry about "if the dollar takes a nose-dive" just walk away as Thai's do

Edited May 29, 2008 by john b good

[richard10365]

I think there are better places to get a loan. I got a loan for a car from Tisco bank. The car was 2nd hand and a little over 500,000 baht. I also had to put down 200,000 baht and get a co-signer. Like a car, there are many places to get one. I'd suggest shopping around before giving in to Bangkok Bank's loan practices.

[freda]

is this new? I am sure i heard about this a year or so ago has somebody been sleeping

[racefan]

There will of course be some plum that buys into this...same as there are plums that send bar girls money every month

Shouldn't I be doing that then? My bargirl is different from the others!!!!

[Bruce1]

Far too expensive to interest me. And there's the visa issues in the background. And, do Bangkok condos worth 9-10m baht increase in value - are they actually good investments?

Also, as someone said, how silly that Thai banks are not supposed to lend to foreigners - that's just stupid. The assumption that foreigners are more likely to default on loans is just a fantasy. If anything, I would think the opposite is true.

I already have a mortgage in Oz, largely funded by rent. A much more stable environment for debt than here.

[ericB]

QUestions :

1) does a property, a condo, have his value increased throught the years , or decreased? In Thailand. If I buy a property in the frenc RIviera, the value will go up year after year (assuming I take care of it). Does it apply here?

2) Being a poor farang, 300 000 us dollars seems quite an amount of money to me. Is it the normal price for a condo in Bkk? Mostly in my residence the condo owned by farangs are sold at 1 up to 2 millions bath. I am not sure how much is it exactly in $, but I suppose 10 000 (1$ = 30 bht) would be an good approximation. I am spoken of a residence near Ratchada, people living here being middle classes (both thai and farangs).

3) What can happend if the buyer can not enjoy his goods, his condo in that case. If he even can not come back to Bkk to pay the mortage? Can we imagine something like people being pushed away for visa reasons, being not able to proove they did pay the mortage (yo ucan still have documentation you send money by your bank to the thai bank, but it's a proof the say thai bank got it, or even understood it was to pay your mortage, nor is it say you can pay the mortage from abroad ...). So Can we imagine the nightmare were condo valued at 300 000 us dollars will simply be taken away from their owners because they can not legally come back and pay, and then resold to some other hightly gullible (ooooooooooops I mean some HI SO) farangs?

[bendix]

Why are people complaining that it's too expensive? 6.5% is at the lower end of the mortgage rate scale at the moment. What world do you guys live in? In Oz, mortgage rates are around 9%. In NZ, they have gone over 10%. 6.5% is a pretty good deal.

[grantbkk]

I just knew when I scrolled down to the end of this news report it would be the Nation. That slut of a property-hype publication. It's all that rag has left. Bullsh+t property hype reports in its new 'business' format - and anti-PPP rhetoric to please the well-healed Thai chattering classes. What's next Society Pages with photos of Generals' daughters? Maybe buying condos..??

Most of us know that Bangkok Bank Singapore was lending til just before the coup, freaked out and stopped lending. Now they're at it again - but they ARE NOT THE ONLY BANK doing this. I believe UOB and Standard Chartered and HSBC pushed back in a few months back for foreigners resident here - and you don't even need to go abraod - they'll do it for you here - they help you get around this "importing 100% of the money" thing too.

So nice try Nation - but hey - did anyone notice if there was a Bangkok Bank advert anywhere near this "News" report??

They are sooo on their way out of business, aren't they - what a mistake to change formats like this. It's such crap.

Oh and one other MAJOR point - they may lend you the money to buy, but that doesn't mean Thailand will let you actually live in it more than 6 months a year - a warning. Sort your visa BEFORE you sort your mortgage!!

Why all the gloom and doom? I hate it when any news is met with 100% negative vibes. Your bringing me down man. The upside of 'Thaigene2's post is that he is 110% correct. Today's article was just like all of the other puff pieces that the editors find in their fax machines when they report to work the day before publication. The best ones come from the larger property companies with western influence. An example would be CB Richard Ellis who has something (anything) in the The Nation about twice a week featuring the photo of a good looking female dubbed the Managing Director of Thailand.

The message is that property purchase is GOOD no matter what the property is or where it is for any price if CBRE is involved. Depending on the day the best buys are on the river, central business district, along future BTS routes, outside Bangkok, resort property, or anything I've missed. These puff pieces are not limited to CBRE and are only cited here as an example. Gone are the days when the article included negative comments like the property is impossible to reach due to the traffic or the project may or may not be completed.

I do not think it is a coincidence that this rehash of the BBL farang loan came on the same day as The Nation Property Guide special section A and B were published.

OH yeah. I live on the river and lease. When the silt starts pouring into the swimming pool I'm out of here.

[jayjayjayjay]

I don't want to scare you off, or space-shuttle your dreams, but apparently for example Bangkok will

be (possibly) anyway under water in 15-20years. According to Khun Smith, who predicted the Tsunamie

in Phuket etc, but nobody listened to his warnings.

Question to all future investors (near seas and rivers etc.)

Sure you (we) wanna invest your money in Bangkok in such property investments??

Read the other TV-thread regarding: "Instable Climate Change & Rising Sea Levels" here: http://www.thaivisa.com/forum/index.php?s=...t&p=2002144

any comments on the sinking feeling topic, please post there...thanks

Buy on a high floor, then you can have BBQ's and invite the friends around to watch the sea lapping at first and second floors. Make sure you have boat mooring in your contract!

[mellow1]

Aren't they scared that foreigners will buy up 49% of Thailand due to such cheap prices?

The 6.5% floating rate also includes 1.5% tacked on ( Farang tax?). Better get yours today, before their all gone.

[astral]

Now what was that old maxim.................

Never invest more in Thailand than you are prepared to walk away from.

[jayjayjayjay]

A USD $300,000 condo must be the perfect place to keep your elite card.

Or hide from your neighbours dog!

[Bruce1]

The US$200,000 minimum is the thing I object to. I have that money, but I wouldn't bring it into LOS under the current circumstances.

I suspect most farangs here would be looking to spend a lot less than that to buy property anyway. Maybe this is just intended to try to support the overpriced luxury condo developers in Bangkok.

[laocowboy2]

Cock-up rather than conspiracy I'm afraid. Thia banks do not really understand either (a) rsidential housing finance or ( financial needs of falangs. Ipso facto - chances of coming up with a halfway decent product for us are almost zero.

In my last job I had to interact with all the Thai banks, including discussing their business models and lending policies.Thai banks generally do not really enjoy lending for residential housing even for Thais. The banks see it as operationally expensive (lots of relatively small ticket loans), low margin (compared to car and motorbike loans) and bad for liquidity (long tenor). Usually when they do lend, they are tied in with a developer (whose developments they have been financing) and the residential mortgage lending is a way to get the construction loan repaid.

Most importantly - and something for everyone to consider when investing in Thai property, is that Thai banks are particularly reluctant to lend for the purchase of second hand property (except of course if it is one of the lemons in their foreclosed properties portfolio). Various excuses are given but the bottom line is that if buyers cannot get finance, you are going to have difficulties in selling if and when you want to do so - the universe of cash buyers is limited.

Think back to your home countries, and think what the real estate market would be like if banks there had the same "policies"? Until this changes, the market will continue to be a minefield. The flip side is thst the first Thai bank that gets its head (and sufficient long term funding) around the possibilities of the second hand market will really clean up.

[tigerbeer]

i have had experiences with Bangkok Bank. They would check up your whole family background down to where your grandmother had her lunches back home.. and if they are alright with it:

they would rob your with all kinds of different fees. what kind of margins we looking at beyond the base lending rate? you do the calculation. like someone else mentioned, never invest in thailand more than what you can walk away from ..

[backflip]

"Cock-up..."

Does this have to do with the "loan was refused because he's a closet gay"?

[barky]

A legal service has been able to facilitate this offer (via Singapore) for a number of years now, so this concept is not new. Anyways, it's over the top, and for the average westener this is not attractive at all. BBL think they are going to cash in, better think again.

[aussiepm]

Classic Thailand!!! Bank is going to woo farangs with great home loans .They must think most big fat whitie's are nitwits.How many thais can afford a condo or house for over 9 million baht.

Definetly less than 1% of the population.And none would buy them anyway theyre so badly built. I have looked at dozens of new houses in Bangkok and they are very poorly built with crusty little bricks covered in cheap stucco(cement) You could seriously damage the walls by knocking things into them theyre so flimsy. and no insulation in the roof!There are thousands of empty condos and houses in BKK,Chonburi and anywhere you find us farangs.Many condos are built with the cheapest materials such as Cambodian cement/concrete and small gauge steel enforcemnt rods! Look out !!!

[steveromagnino]

Thia banks do not really understand either (a) rsidential housing finance or ( financial needs of falangs. Ipso facto - chances of coming up with a halfway decent product for us are almost zero.

In my last job I had to interact with all the Thai banks, including discussing their business models and lending policies.Thai banks generally do not really enjoy lending for residential housing even for Thais. The banks see it as operationally expensive (lots of relatively small ticket loans), low margin (compared to car and motorbike loans) and bad for liquidity (long tenor). Usually when they do lend, they are tied in with a developer (whose developments they have been financing) and the residential mortgage lending is a way to get the construction loan repaid.

Thai banks are particularly reluctant to lend for the purchase of second hand property ...flip side is thst the first Thai bank that gets its head (and sufficient long term funding) around the possibilities of the second hand market will really clean up.

Some interesting points.

However, first to clear up some misconceptions

- almost ALL loans in Thailand are MLR + something - for Thai people as well; the MLR is the cost of the money for the bank, they add on a little something something

- $200k USD is NOT a lot of money to be borrowing when you have Sathorn for example where almost every condo in the area with at least 2 bedrooms is now something like $300-400k USD; the costs are going up to build and they ain't likely to come down until oil prices do

- BBL has a bit of a puff piece here, only thing different I can see is you don't have to go abroad

Now....talking about why $200k USD....

OK, to give you some background, in a past life i set up a retail only bank, no branches, our lead product was home lending. Initially, we went after everyone, as we were undercutting traditional banks by about 50 basis points, some terms ballooning to 150 basis points.

Not long after, we did some ABC (activity based costing) and we discovered that our business model, adding in the time of call centre, processing, paperwork etc - we were losing money on average for any loan under about what was then $90k USD. Since we were only new, we didn't have default data and so had to use our parent (traditional bank) data to data mine for our predictive model for lending. In order to run the loan book lean and mean, we chose to cherry pick, take the big customers with loads of security and a nice decent asset + income....and this is part of the reason we had that big price advantage.

The typical foreigner here, there are approximately 250,000 foreigners holding either work permits or a license to work (data direct from Ministry of employment, I assume a license is for the people earning under the country minimums) excluding the additional 600,000 odd maids etc from neighbouring countries. That's not a bad sized market, but a huge number are only here briefly or medium term.

Banks look for the 3 Cs - credit, collateral, cashflow; tough to get a credit history from a foreigner who hasn't got a long history here, collateral is as said above always treated with skepticism for anything 2nd hand and cashflow is less certain because there is always the chance they will leave. A bank never wants to actually have to foreclose.

Add to that the additional costs of doing business with a foreigner - all paperwork in different languages; additional call centre english speakers; non routine questions; regulatory issues - so for me absolutely no way as a bank to wish to deal with small fry foreigner loans as there is no money to be made anyhow with a higher cost base and a (probably) higher risk profile or at a minimum insufficient data to know whether it is a higher risk profile. And banks are super conservative, in everywhere except moronic places like the US.

Get over yourselves if you think you are a better security risk than Thais. Have you looked around at the dregs of humanity living here who could probably afford some sh%thole condo in some low cost project? Would you personally lend most of these people money? As a bank manager knowing that the person can just up and leave plus anticipating the additional costs of dealing with them....when you have a fairly vibrant low end mid end market at the moment for Thais, and a high end that both affluent Thais and foreigners are in, why would you decide to service the low mid end for foreigners??! Sukhothai, THe Park, Infinity, etc - that is the only type of foreigner worth lending to in most bank's eyes.

For me the second hand market is an interesting one. With the market agents and so forth so undeveloped, I really wonder whether the sticking point is with market liquidity (my feeling) or lack of financing for buyers (idea expressed above). There are a number of societal attitudes that explain why new always beats second hand emotionally, and I think this is still a fair way off.

[A_Traveller]

The key point, irrespective of the business model, is

There are a number of societal attitudes that explain why new always beats second hand emotionally, and I think this is still a fair way off.

which distorts the property marketplace. There is little secondary market activity here, and without a 'property ladder', using existing to buy up, there is little chance that this distortion will disappear in the short to medium term. The majority of the marketplace want new only, and will no consider 'pre-owned'.

Regards

[Bruce1]

Its interesting they won't consider farangs' assets held overseas, maybe in their home country. All sorts of legal reasons I guess. Reality is there are quite a few farangs here who have good assets back home. You'd think the banks here would at least consider a history of rental income available from overseas when making decisions about peoples' loan applications.

I take your point about farang dregs, but most farangs are not dregs so they need to broaden their thinking.

I actually think the big opportunities are in the second hand market here, but the system is not set up to support it.

I reckon there are plenty of homes which could be done up a bit and sold for a decent profit if financing was easier.

However, I for one won't be selling up back home to buy here while the system is as it is. No skin off my nose, but it does deprive LOS of the money I could spend if it were more welcoming here.

[laocowboy2]

The key point, irrespective of the business model, is

There are a number of societal attitudes that explain why new always beats second hand emotionally, and I think this is still a fair way off.

which distorts the property marketplace. There is little secondary market activity here, and without a 'property ladder', using existing to buy up, there is little chance that this distortion will disappear in the short to medium term. The majority of the marketplace want new only, and will no consider 'pre-owned'.

Regards

Accept point, and that of previous post but attitudes will have to change over time (on the part of both buyers and banks) as there will never be sufficient new build at a competitive price and in the right location to satisfy housing needs while those who have houses or apartments and want to have something better may be reluctant to rent out

[mitrapaap]

Actually, I got a loan from Bangkok Bank (in Bangkok) as long ago as 2001. It was for a 64 sq metre apartment in central Bangkok that cost 2 million baht and the loan was for 1.2 million baht. I got it with the click of a finger. Of course, in 2001 they were desperately trying to get the property market re-activated; however, it just shows that anything is possible in Thailand even when you're told that it's not!!

JMS

2 million for 64 square metres.

Others buy a house for less.

[mikethevigoman]

Haha, what a joke. Lets rip the foreigner off who is besotted with Thailand.

Why won't the BOT allow banks to lend to foreigners? If the loan is secured, what does it matter?

Thailand is for Thais and foreigners are for giving money to Thais

I agree, as usual its a one way affair with no loss possible for the lender,( and probably no long term invsetment for the borrower ).anyone that has this sort of money ought to have a brain too ..lets hope so,.invest the money at home and rent i say,.

[Bruce1]

I think its fascinating how weak the consumers are in LOS, they appear to have little market power and to be at the mercy of those who want to exploit and patronise them. They put up up with being treated like lepers by lenders, when actually the loan default rate here is not unusually high, from what I've heard. Thais could have a much higher standard of average housing if they had governments which were prepared to insist the financiers gave them a better deal. Its like credit is almost a dirty word, instead of being a way to improve living standards.

[steveromagnino]

Its interesting they won't consider farangs' assets held overseas, maybe in their home country. All sorts of legal reasons I guess. Reality is there are quite a few farangs here who have good assets back home.

Like I said, banks other than the American sub prime lenders tend to be pretty conservative worldwide.

The purpose of the 3Cs check is to ensure that the person will pay, that they won't not pay, and that for sure....we have a hold over them so they will pay.

There is not really any desire to actually have to seize assets, but there has to be a sufficient stick to ensure the borrower cannot just walk away easily. The last thing the bank wants to do is actually have to foreclose; they aren't in that business (actually truth be known, banks are pretty s&^t at everything).

So...securing a Thai mortgage with a property in New York, can you imagine how difficult it would be to ensure that the valuation is correct, that the deeds and title provided as security were genuine, and in the event of seizing the asset, that the Thai bank would be legally able to do so? Can you imagine the costs incurred?

Unless for a rather large amount, it simply would not be worth it.

Mitrapap; no idea where you bought a house for 2m but to give you an idea, I could choose to buy a condo at Sukhothai for about 50 million baht or a similarly sized house from Property Perfect for 5 million.

You cannot compare the two; I can get the same calories from a Big Mac and a coke or fresh grilled trout just caught in the Tongariro and seasoned with rock salt and pepper coupled with a nice Sav Blanc from Nelson.

Horses for courses (and yes, ocassionally I eat a big mac)

You guys have noticed the massive success for Thai property developers in recent years right in a variety of market segments? All acheived without needing to sell to 'the mighty foriegner' for the most part. The majority of projects selling to foreigners 'bpen luk' are the foreign developers.

[Journalist]

Have you looked around at the dregs of humanity living here who could probably afford some sh%thole condo in some low cost project? Would you personally lend most of these people money?

Cruel yet true....

Now you come to mention it ....no. I wouldn't lend them money.

Calling them 'dregs' is a bit unkind though. 'educators' is a nicer word.

[whatsoever]

I know i am a newbie here so please forgive me if i am off the mark - but is Thailand governed by earthlings! If yes what programmes have been installed into their rulers? Sounds like microsoft have found a home for a batch of dodgy programmes!

Edited May 29, 2008 by whatsoever

[zorro1]

Actually, I got a loan from Bangkok Bank (in Bangkok) as long ago as 2001. It was for a 64 sq metre apartment in central Bangkok that cost 2 million baht and the loan was for 1.2 million baht. I got it with the click of a finger. Of course, in 2001 they were desperately trying to get the property market re-activated; however, it just shows that anything is possible in Thailand even when you're told that it's not!!

JMS

2 million for 64 square metres.

Others buy a house for less.

This one post is THE typical posting of a farang in Bangkok who is clueless. Nothing like getting it totally wrong and then showing the world to see

[grapetable]

Currency and interest rates are not a problem, you can hedge out both risks with forwards and or futures at little relative cost. There are a host of other risks that would be difficult to hedge against...........market, political, neighbours, voracious gf's etc etc