Thai Borrowing Money For Land Purchase

[dave_boo]

I was wondering if anyone had knowledge on the current status of banks lending money to a Thai national for purchasing farm land. With the current global crisis, are they less willing to do so?

Some back story. The wife has finally come around to not living for today and planning for the future. She's interested in buying some farm land (that's both our background) and raising her credit score. She is a stay at home mum, but has had regular deposits into her Thai bank for quite some time now exceeding 100k THB per month. She has a house built using that account, as well as a Vigo that's 3/4 paid for. Outstanding balance is in excess of 1M THB in the account. Basically, with the exception of the truck payments, there are no debts. She had no credit before purchasing the truck and has remained in good standing in regards to timely payments.

Would a bank afford her a 2M THB loan to purchase land considering the above information? Would the payments be monthly or yearly? Either way is acceptable, since I shall continue to work offshore and the payments will be easy enough to make.

The point of this loan is to further build her credit, increase landholding above the 25 rai that she currently possesses and hopefully increase the possiblity of a future loan of an amount approximately 4x the currently sought loan for similar reason. There are a few farms in the area that are being sold at basement prices due to distressed finances of the owner and the wife wants to snap them up whilst the market is in the buyers favour.

Thanks for any responses.

[Tigs]

I was wondering if anyone had knowledge on the current status of banks lending money to a Thai national for purchasing farm land. With the current global crisis, are they less willing to do so?

Some back story. The wife has finally come around to not living for today and planning for the future. She's interested in buying some farm land (that's both our background) and raising her credit score. She is a stay at home mum, but has had regular deposits into her Thai bank for quite some time now exceeding 100k THB per month. She has a house built using that account, as well as a Vigo that's 3/4 paid for. Outstanding balance is in excess of 1M THB in the account. Basically, with the exception of the truck payments, there are no debts. She had no credit before purchasing the truck and has remained in good standing in regards to timely payments.

Would a bank afford her a 2M THB loan to purchase land considering the above information? Would the payments be monthly or yearly? Either way is acceptable, since I shall continue to work offshore and the payments will be easy enough to make.

The point of this loan is to further build her credit, increase landholding above the 25 rai that she currently possesses and hopefully increase the possiblity of a future loan of an amount approximately 4x the currently sought loan for similar reason. There are a few farms in the area that are being sold at basement prices due to distressed finances of the owner and the wife wants to snap them up whilst the market is in the buyers favour.

Thanks for any responses.

Dave

I cannot see any snags at all. By the look of it the banks will already think her credit rating is awesome. A 2 mill loan could be done over 8 years at anywhere between 22 to 30 k per month depending on who the bank is. Good Luck.

[aurelius]

Not that simple, there will be other factors considered by the bank...

1. you must be legally married and you will be the guarantor of the loan (I'm assuming her income is coming from you)

2. the land must be seen to be productive, not speculative (the land is expected to contribute cash flow towards paying for itself)

3. she will be asked to show the source of her "income"; the bank does not rely on the two of you staying married to guarantee that they will get repaid - they will want to ensure that your income is sustainable; not sure how they view income earned from abroad

4. in the event of her demise, you will not be able to own the land, but you (as guarantor) willl be called upon to settle any outstanding amount. If the property is sold, the proceeds from the sale will go to her estate (kids?), not necessarily to repaying the loan - you could end up in a position of having to pay for something that you will never own/benefit from. Make sure she has loan repayment insurance.

The loan will be repaid monthly, interest rates are good at the moment. Look for a loan with the longest fixed interest rate, some banks are offering 0% for 3-6 months, but they are making it back from then until the end of the 3rd year.

Good Luck

[antony77]

I was wondering if anyone had knowledge on the current status of banks lending money to a Thai national for purchasing farm land. With the current global crisis, are they less willing to do so?

Some back story. The wife has finally come around to not living for today and planning for the future. She's interested in buying some farm land (that's both our background) and raising her credit score. She is a stay at home mum, but has had regular deposits into her Thai bank for quite some time now exceeding 100k THB per month. She has a house built using that account, as well as a Vigo that's 3/4 paid for. Outstanding balance is in excess of 1M THB in the account. Basically, with the exception of the truck payments, there are no debts. She had no credit before purchasing the truck and has remained in good standing in regards to timely payments.

Would a bank afford her a 2M THB loan to purchase land considering the above information? Would the payments be monthly or yearly? Either way is acceptable, since I shall continue to work offshore and the payments will be easy enough to make.

The point of this loan is to further build her credit, increase landholding above the 25 rai that she currently possesses and hopefully increase the possiblity of a future loan of an amount approximately 4x the currently sought loan for similar reason. There are a few farms in the area that are being sold at basement prices due to distressed finances of the owner and the wife wants to snap them up whilst the market is in the buyers favour.

Thanks for any responses.

Dave

I cannot see any snags at all. By the look of it the banks will already think her credit rating is awesome. A 2 mill loan could be done over 8 years at anywhere between 22 to 30 k per month depending on who the bank is. Good Luck.

you should have no problem provided the land she wants to buy has a proper title deed i.e "chanote" she can mortgage it to the bank Might have to pay monthly over 10 years but interest rates are low now maybe about 8%

[dave_boo]

Dave

I cannot see any snags at all. By the look of it the banks will already think her credit rating is awesome. A 2 mill loan could be done over 8 years at anywhere between 22 to 30 k per month depending on who the bank is. Good Luck.

That's a little longer than I was expecting the loan to be; I understand that they make money on the flat rate interest so it's in their interest (no pun intended) to drag the loan out as long as possible, but I want the wife to be able to apply for a larger loan in say four years. The eventual goal is for her to become a land baron (sorry, I'm from the States and it's in our blood).

Not that simple, there will be other factors considered by the bank...

1. you must be legally married and you will be the guarantor of the loan (I'm assuming her income is coming from you)

AFAIK it's only coming from me (just poking fun at all those people who think all Thai women have multiple husbands). We did the village marriage but did not register at the amphur based on the comparison of ease of getting a fiancee visa versus a marriage visa. I was unaware that she would be able to get a non-resident non-working permit foreigner as a guantor. When she purchased the truck through Toyota financing, her mother was the guantor and they accepted the bank statements along with the story that she was getting paid to take care of our daughter...

2. the land must be seen to be productive, not speculative (the land is expected to contribute cash flow towards paying for itself)

That's a given; she'd be purchasing land already in production. As stated in the OP, most of the land she's looking at is from people who got themselves in a bind and need to sell; there's nothing wrong with the land itself.

3. she will be asked to show the source of her "income"; the bank does not rely on the two of you staying married to guarantee that they will get repaid - they will want to ensure that your income is sustainable; not sure how they view income earned from abroad

See my reply to question 1. I'm wondering how much that really matters; if they hold the chanote until the fullfillment of the loan, won't they come ahead anyways in case of default?

4. in the event of her demise, you will not be able to own the land, but you (as guarantor) willl be called upon to settle any outstanding amount. If the property is sold, the proceeds from the sale will go to her estate (kids?), not necessarily to repaying the loan - you could end up in a position of having to pay for something that you will never own/benefit from. Make sure she has loan repayment insurance.

I had no dillusions about my ownership from the time we started formulating this idea. It would be nice if the land could default over to our daughter, but I had not considered loan repayment insurance; thank you for bringing that to my attention.

The loan will be repaid monthly, interest rates are good at the moment. Look for a loan with the longest fixed interest rate, some banks are offering 0% for 3-6 months, but they are making it back from then until the end of the 3rd year.

I figured it would be monthly; are there any early payment penalties such as in the West? Or is it simply you're paying the flat interest so they get their money no matter what?

Good Luck

[Tigs]

Dave

I was just giving you an idea of the rates. If you can pay it back in a year the banks will run with it, it is up to the two of you, all I was saying was that with the figures you quoted she should have no problem providing there is a title deed with the land.

[aurelius]

Dave

There may not be a requirement for residential income, but most likely it will be one of the factors evaluated by the bank when they consider the app. This type of loan application is in the "doesn't follow the established rules" area for most banks - so get to know your banker, make it personal, and you'll have a much better chance.

The bank will look at it this way - where does the money come from to pay the loan - initially its you (where is it coming from, how stable is it); secondly it may be the earnings from the property. Forced sale is viewed as protection for the bank but not viewed as "repayment" and inspite of what people think, they always try to avoid having to re-possess.

The typical loan "break" clauses for home loans are at 3 years. Your loan probably will not qualify as a loan for home building/owning purposes so the conditions may be more flexible, and interest rates will be a little higher - MRR or so. Repayments are the standard table repayment structure - a fixed monthly amount made up of varying proportions of interest and principal as time goes by.

[moo9]

As for the max. loan period, which age would be considered? Wife's age of mine as a guarantor? SCB said my age, so anybody has different experiences?

Cheers