Expats Can Get Condo Loans From Bangkok Bank

[sibeymai]

my understanding is that the buyer is entirely protected when they have a basic "subject to finance" clause in the contract. The deposit is held by a third party (solicitor or the vendor's real estate agent), and would never pass to the vendor until the sale is finalised.

In North America and UK - Not in Thailand. Some legit law firms will offer this service, but it's not mandatory. As for "subject to" clauses and timing for removal of clauses - good luck. Never seen that here either. This is the Wild West - you hand over a deposit, you pray nonething goes wrong, you do your 'due diligence' to ensure that the person selling actually owns the property (doesn't have any liens against it) and that he/she will be handing over a chanote on the day of sale.

You take your money to the Land Office - with a lawyer - where you meet the seller, together you do the transfer there - both parties carefully watching each other to make sure they don't get screwed. You again check to see that no last-minute loans have been secured against the property by the seller, you pay a transfer fee and taxes to the Land Office, the title (Chanote) is signed over to you as you give the seller the remaining balance and your name is registered as the new owner at the Registry office.

There are no 'subject to this-or-that you must give me my money back..' Should be, but it's not standard practice here that's for sure.

That's pretty much it. You'll have a hard time getting a Thai vendor to accept the inclusion of any such clauses. They will be highly suspicious simply beacuse it is not normal practice here. They will be suspicious dealing with a foreigner as it is without adding anything unusual.

Same goes for banks. You won't get anything such as a "pre-approval" in writing. You need to meet with the bank's loan officer and explain what you want to do. Take all your documentation with you that you would submit with a loan application. You wil then be told whether you meet the criteria and get an indication of how much you can borrow and the maximum value of the property you can purchase based on your deposit and ability to repay. You will not get anything in writing and you hope that the person you're speaking with actually has the authority to approve your loan when you do the application (in my case he didn't but he led me to believe he did).

Then you have paid the deposit and have signed a contract to purchase then you go back to the bank and submit the loan appication. As thaigene2 says, it's from this point on that you start praying that nothing goes wrong.

[realmadrid25]

lol this is a horrible deal but farang will be lining up to participate.

[A_Traveller]

^^ The problem is, presently, there's no formal escrow law, or provision for a solicitors {attorneys} undertaking, in place here, so transactions, especially involving land operate still at an almost feudal level of trust.

Regards

Edited May 31, 2008 by A_Traveller

[LaoPo]

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.

"The bank also needs to quote floating interest rates, while the property asset will be pledged as loan collateral."

...also: you're talking US $'s and the $, as you know, can go both ways, up or down and that's very risky for anyone buying a condo for $ 300K's (+ the floating interest rate). The rate for Euro's is 6.5 + 1.5 = 8%...

If you think it's cheap money, what's expensive ?

Oz and NZ mortgage rates at 9-10% are signs it's risky business; I remember times when mortgage raters were 13 and 14% in Europe and I watched a lot of severe problems with families not being able to pay for their mortgages anymore.

Same same in this situation and I think the offer from said bank is just bull promotion and I think I can even predict they don't have to put extra guards outside the bank to control the masses begging for their mortgage product....

LaoPo

[thaigene2]

At their worst, in the mid 1980's, they were up to 24% in Canada. People with 10% equities were walking away left and right..and leaving their keys with the bank on their way out of town.

[SiriusBlack1]

Exorbitant interest rates, high downpayment, short payback period if you're middle-aged, only for the most expensive condos.

Thanks for nothing, basically.

[Heng]

There's always cash if you don't like the terms.

[LaoPo]

There's always cash if you don't like the terms.

Of course...but BBL doesn't like people like you telling the audience

LaoPo

[quiksilva]

my understanding is that the buyer is entirely protected when they have a basic "subject to finance" clause in the contract. The deposit is held by a third party (solicitor or the vendor's real estate agent), and would never pass to the vendor until the sale is finalised.

In North America and UK - Not in Thailand. Some legit law firms will offer this service, but it's not mandatory. As for "subject to" clauses and timing for removal of clauses - good luck. Never seen that here either. This is the Wild West - you hand over a deposit, you pray nonething goes wrong, you do your 'due diligence' to ensure that the person selling actually owns the property (doesn't have any liens against it) and that he/she will be handing over a chanote on the day of sale.

You take your money to the Land Office - with a lawyer - where you meet the seller, together you do the transfer there - both parties carefully watching each other to make sure they don't get screwed. You again check to see that no last-minute loans have been secured against the property by the seller, you pay a transfer fee and taxes to the Land Office, the title (Chanote) is signed over to you as you give the seller the remaining balance and your name is registered as the new owner at the Registry office.

There are no 'subject to this-or-that you must give me my money back..' Should be, but it's not standard practice here that's for sure.

That's pretty much it. You'll have a hard time getting a Thai vendor to accept the inclusion of any such clauses. They will be highly suspicious simply beacuse it is not normal practice here. They will be suspicious dealing with a foreigner as it is without adding anything unusual.

Same goes for banks. You won't get anything such as a "pre-approval" in writing. You need to meet with the bank's loan officer and explain what you want to do. Take all your documentation with you that you would submit with a loan application. You wil then be told whether you meet the criteria and get an indication of how much you can borrow and the maximum value of the property you can purchase based on your deposit and ability to repay. You will not get anything in writing and you hope that the person you're speaking with actually has the authority to approve your loan when you do the application (in my case he didn't but he led me to believe he did).

Then you have paid the deposit and have signed a contract to purchase then you go back to the bank and submit the loan appication. As thaigene2 says, it's from this point on that you start praying that nothing goes wrong.

According to the new escrow law which came out earlier this month, only banks and financial institutions that have no relationship with either party can act as escrow agents in Thailand. No matter how well intentioned lawyers and estate agents can not.

"subject to..." clauses are used frequently in commercial real estate in Thailand, but they are certainly a rare occurrence in the residential sector.

[Hanuman2547]

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

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

VERY good advice!!!!!!!!!

[Hanuman2547]

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.

That and only condos priced at a minimum of USD 300,000. In Bangkok spending that amount is easier to do, especially along the Sukhumvit corridor, but in places like Pattaya or Phuket there are fewer condos in that price range. In many ways you are priced out of condos due to the minimum!

I don't really see how this will help that many farangs. Maybe just a very select few. Also the age limit would not help those retirees at all. However, I still think that if you plan on buying it's best to just pay cash. The loans they are promoting just have too many variables that you can't control. The variable rate is one big problem. 6.5% might be ok but what if three years down the road it jumps to 8.5%? The new mortgage rate might be very difficult for someone to pay. The other thing is that if you get into a financial pinch and need to sell it's not easy to offload a USD 300,000 condo. This is especially true if your company decided to transfer you with only a months notice or less!!

[Belle]

Seem like singapore is very keen & confident in thailand's propety, not just banks from singapore are giving out loan, real estate companies in singapore are marketing thailand's condo by throwing in packages to fully furnish your unit and guaranteed you rental return of at least 7% pa for the 1st year. and the loan can be from UOB or bangkok bank if you are in singapore, you don't even need to travel to thailand to own a unit here.... everything is taken care of.... wow!

[LaoPo]

Seem like singapore is very keen & confident in thailand's propety, not just banks from singapore are giving out loan, real estate companies in singapore are marketing thailand's condo by throwing in packages to fully furnish your unit and guaranteed you rental return of at least 7% pa for the 1st year. and the loan can be from UOB or bangkok bank if you are in singapore, you don't even need to travel to thailand to own a unit here.... everything is taken care of.... wow!

One could wonder why these S'pore real estate companies are so keen in promoting Thai condo's. Maybe they like to make money ?

Also: a guarantee of 7% for the first year sounds attractive but a year is short....just 12 months

If companies are throwing with 'full packages' it's ALWAYS smelly....

Don't forget: it's a buyers' market, not a sellers one and that happens to be the case in most parts of the entire world, not just BKK.

The Inflation Ghost is a nasty one....

LaoPo

[thaigene2]

According to the new escrow law which came out earlier this month, only banks and financial institutions that have no relationship with either party can act as escrow agents in Thailand. No matter how well intentioned lawyers and estate agents can not.

"subject to..." clauses are used frequently in commercial real estate in Thailand, but they are certainly a rare occurrence in the residential sector.

Any idea why that is?

[guava]

According to the new escrow law which came out earlier this month, only banks and financial institutions that have no relationship with either party can act as escrow agents in Thailand. No matter how well intentioned lawyers and estate agents can not.

"subject to..." clauses are used frequently in commercial real estate in Thailand, but they are certainly a rare occurrence in the residential sector.

Any idea why that is?

Without acknowledging that this is actually the case, the likely cause would be people not insisting on it. I need more than anecdotal evidence to accept the "certainly a rare occurrence" claim as fact That's a massive call quiksilva, but it's certainly not the only one in this thread.

I'm not a legal expert, and I don't really want to debate whether this is rare or not, but I have had "subject to finance" and other clauses (including what I consider basic and essential ones like "free of title encumbrances, liens, debts, tenancy agreements", a detailed list of inclusions/exclusions, who pays transfer fees, etc) on residential property contracts in Thailand. AFAIK there was no drama involved. Perhaps the solicitor I used, or even the vendor's agent, had to fight for some of them, but that's why they get paid. So it is possible, if not actually common, for residential sale contracts to specify terms and conditions including "subject to finance". At the end of the day I would never sign a contract and/or pay a deposit unless I was adequately protected.

If the information about escrow law discussed above is accurate, that is cause for concern, but I would still think that the vendor would have no grounds to keep the deposit even if it had prematurely made it's way into their hands. Maybe I am placing too much faith in the legal system here. I acknowledge that it is not quite up to the standard of the western world, and there may be bias against outsiders, but I don't believe things are even close to as "wild west" lawless as some claim. Thousands of people buy and sell in Thailand every week, and if there were the gaping holes in the system that some insist there are......

Any input from the legal people who visit the board?

Check out this link. http://www.thaiproperty.com/buying/negotiating.htm This is just one link supporting pretty much what I say, but if there is over-whelming evidence to the contrary, I'm prepared to eat humble pie

[dominique355]

About 5 years ago, when we bought our house here in Bangkok, we applied for a mortgage at Siam City Bank. The house was obviously in my (Thai) wife's name, but the mortgage was also in my name and we had no problems getting the loan. Three years later we paid everything back in full, but still keep an account at that bank. It's a small bank, but very friendly and efficient staff. I can only recommend them although our dear friend Samak believes differently.