What Percentage Mortgage

[tuktukmike]

Hi all

Wonder if anyone can help,

I was told i could get a 70% mortgage by my lawyer but am now told sorry only 50% for a farang.

This seems a little odd to me as i have a 2million bht company which is trading and a farang wife who is a teacher out here.

I would like to hear from others to see if this is correct.

many thanks, mike.

[Heng]

I don't think there are any firm/set percentages as to what a falang has to put as down payment.

Screw the bank. If you don't qualify for a 5 year mortage, go for the longest one they have... 15-20 years, and then pay it all off as fast as you can (as in a year or less). It'll make the approval much easier if you lengthen the term. And don't show them all your cards... if you make 450k a month, only show them passbooks that show revenue of say 100k a month (so they think you'll really pay month by month). Bankers usually foam at the mouth when they think you'll be paying them interest for 15 years. ...It's then pretty amusing to show up and close out early, later on in the year.

You'll note that a lot of banks have 1% interest rates for the first 6 months, often more than enough time to close out the loan entirely (you'll get a small x% penalty for closing early... but it sure beats the alternative of giving away funds in interest to them).

[OldAsiaHand]

Hi all

Wonder if anyone can help,

I was told i could get a 70% mortgage by my lawyer but am now told sorry only 50% for a farang.

<{POST_SNAPBACK}>

Thai banks love to play games with loan to value ratios for residential properties, and they do it whether you're a Thai or a foreigner, so regardless, don't take the percentage they're tossing out too seriously.

Banks will say they're giving you a 100% or 80% or 50% loan, but then they will value the property at half of what you are paying for it and you end up with a much, much smaller loan than you expected. This happens without exception. The way you deal with it is to ignore the percentage until they value the property, then you continue to ignore the percentage and the property valuation and try to negotiate the gross loan amount itself as a specific dollar figure.

Sometimes it even works.

[pedro01]

Hmmmm...

Banks do not devalue properties in my experience. If the Bank values a property at half the price I'm paying, I'd presume I was getting screwed by the sellor, not the bank ! Think about it - banks WANT to lend you money, as long as it is fairly safe for them to do so.

I got the usual low-start mortgage on my property - I got quotes off both Bangkok Bank & Thanachart finance company, I visited others but nothing exciting came up. Thanachart offered 80% of a 7.4 million Baht property & I took it. I pay 1.5% 1st year, 2.5 second year, 3.5 third year. Bangkok bank wouldn't go above 70%.

There's a wide range of mortgage products out there - my advice is to shop around and not just look at the banks - there are lots of hungry finance companies out there who seem to be giving better deals to bring in customers.

Finally, I would advise showing ALL documents you have to the bank manager - the more the better. This won't stop him from giving you a 15 year loan at all. They like the longer loans.

Good luck.

[Blake7]

Get an expat mortgage from HSBC...

[trajan]

Get an expat mortgage from HSBC...

<{POST_SNAPBACK}>

Hi Blake7.....if you're familiar with the HSBC mortgages, can I ask how long the loan terms are? 10 years? 20 years? I need a bit longer term (like 20 years) to handle the monthly payments. Thanks!

[Blake7]

Basically they run the same as a uk based mortgaged but are a bit more fussy in terms of collateral and downpayments and you don't get as good an interest rate as the uk but still its alright. therefore you should be able to geta 20 year mortgage the same as you would in uk (providing you are not over 45...)

[OldAsiaHand]

Banks do not devalue properties in my experience. If the Bank values a property at half the price I'm paying, I'd presume I was getting screwed by the sellor, not the bank ! Good luck.

<{POST_SNAPBACK}>

You really haven't had much experience have you?

Thai banks have firm guidelines for every condo building in town that, at least with respect to the ones I've actually seen, average about half of the current fair market value in those buildings. The reason for that, of course, is these banks want to increase their margin on the loan, just in case it goes bad. Like most Thai companys, they would prefer to do that in a face saving way -- i.e. by lowballing the valuation -- rather than being straight up about it and telling you they want to lend you less.

Any property agent in town can give you a very close guideline to the real market value of most any property: a class A building in lower Suk being B65-75,000 per meter, a class B in upper Suk being B45-50,000 per meter, raw land between Suk 37 and Suk 55 being B100-120,000 per rai and so on. You can count on the bank giving you a value of 50%-60% of that amount on the condos and nothing at all on the raw land.

That's not evidence that you're being 'screwed by the seller' since everybody in town knows what the real market value is of almost everything. It's just the way business is routinely conducted by the banks here. They're not your pal, friend.

[pedro01]

Banks do not devalue properties in my experience. If the Bank values a property at half the price I'm paying, I'd presume I was getting screwed by the sellor, not the bank ! Good luck.

<{POST_SNAPBACK}>

You really haven't had much experience have you?

Thai banks have firm guidelines for every condo building in town that, at least with respect to the ones I've actually seen, average about half of the current fair market value in those buildings. The reason for that, of course, is these banks want to increase their margin on the loan, just in case it goes bad. Like most Thai companys, they would prefer to do that in a face saving way -- i.e. by lowballing the valuation -- rather than being straight up about it and telling you they want to lend you less.

Any property agent in town can give you a very close guideline to the real market value of most any property: a class A building in lower Suk being B65-75,000 per meter, a class B in upper Suk being B45-50,000 per meter, raw land between Suk 37 and Suk 55 being B100-120,000 per rai and so on. You can count on the bank giving you a value of 50%-60% of that amount on the condos and nothing at all on the raw land.

That's not evidence that you're being 'screwed by the seller' since everybody in town knows what the real market value is of almost everything. It's just the way business is routinely conducted by the banks here. They're not your pal, friend.

<{POST_SNAPBACK}>

You are probably right for lower Sukhumvit condo's, however my experience is with houses and I stand by the statement that the bank values them fairly. A few months ago purchased house in On-Nut for 7.4 million, banks value was 7.2 million. Usually price per sq wah + value for the house & fittings.

The prices of condo's in lower Sukhumvit are just crazy - maybe the banks realise that too. Just because people are paying 65-75,000 per sq metre does not mean they are worth that much - remember last time the bubble burst ? I think the banks do...

[PvtDick]

I recently purchased a condominium in Sukhumvit. The bank's valuation was 25% less than what I paid.

[Digger]

Thai banks have a simple method of property valuation. Firstly they calculate the building cost on a sq M basis of the house, which is typically 7,500 baht for a single floor house and 9,000 baht for a 2 floor house. They then value the land based on TW. They will also value the swimming pool if their is one based again on a SQ M price. No consideration is made of anything removable such as Air con, Kitchens, bathroom fittings etc. They do not take into account tiles or floors either. Basically they are looking at what is the bare shell of a property in the event that if they repossess it and the owner knows its happening, likely that he will remove everything that can be sold for cash.

Most Thai developed houses do not include kitchens, aircon etc - its up to the buyer to do that themselves.

Therefore there are frequent big differences in valuations as the purpose of the valuation is not its market worth as a fantastic house, but a simple shell building which is normally all that is left if they have to re-possess. Therefore they use the worst case scenarios to protect themselves. I have never seen a bank valuation get higher than 75% of any property I have bought here in Thailand, but every one I have managed to re-sell for at least 20% more than I paid.

Incidentally, I have also never achieved a mortgage higher than 50% of the bank valuation and invariably they want to restrict to 5 yr term.

Hope this helps

[tuktukmike]

Thanks all for your replies,

Looks like 50% is the best i will get in little old Hua Hin.

I have tried all the banks and the reply seems the same everywhere i go so i will just have to swallow it.

mike.