Finance Construction Costs

[blueseyes]

My Thai husband and I are looking to borrow money to finance construction of a new house in Thailand on land he already owns. We both live in Australia permanently and work here earning good incomes. I have looked at loans on Kasikorns website http://www.kasikornbank.com/EN/Personal/Loans/KHomeLoan/Pages/KHomeLoanKasikorn.aspx

and it appears we can get a loan of up to 100% of construction costs, providing the valuations stack up. My husband thinks the bank may not accept his proof of income because he works in Australia, not Thailand and that the bank will not provide the money until the house is finished.

Does anyone have experience with borrowing from Thai banks to pay for construction of a new house? How did the processes work / was it difficult to get the loan? I know in Australia these kinds of loans are really straight forward so was wondering about the similarities/differences. Thanks.

[lovelomsak]

This is just a suggestion and the way I would do it. If I couldnot pay cash. With 2 incomes from Australia cash should be easy.

If cash isnot available. Take a personal loan out in Australia and pay cash in thailand. Unless you are building a huge expensive house $40,000 -$50,000 Australian should be all you need. You could get that easy as a personal loan in Australia.

Also banks seem to prefer mortgage loans on the finished product here it seems. I think your husband is right they willnot give the money till the construction is finished.

[blueseyes]

This is just a suggestion and the way I would do it. If I couldnot pay cash. With 2 incomes from Australia cash should be easy.

If cash isnot available. Take a personal loan out in Australia and pay cash in thailand. Unless you are building a huge expensive house $40,000 -$50,000 Australian should be all you need. You could get that easy as a personal loan in Australia.

Also banks seem to prefer mortgage loans on the finished product here it seems. I think your husband is right they willnot give the money till the construction is finished.

Hi Lovelomsak

We could probably pay with cash but for various reasons borrowing is more suitable (We are both young and would like to save our big financial committments for western property).

I did the figures for a personal loan based on a budget of say B2million, which is about $70k AUD.

If we were to get a personal loan @ 10% over 6 years, thats roughly $1300 AUD per month ($15,600 p/a in repayments) versus $380 per month ($4,560 p/a in repayments).

As for not giving money until construction finished, that would be a pain. The website is ambigous, it says:

"4. If you build a home on your own land, mortgage loans are granted at not exceeding 100 percent of home construction cost but not exceeding 90 percent of appraised value of the land and building. The installment term is not longer than 30 years. "

If they didnt give the money until after construction complete, then the above reference has no utility since it would simply be a standard mortgage.

[TPI]

This is just a suggestion and the way I would do it. If I couldnot pay cash. With 2 incomes from Australia cash should be easy.

If cash isnot available. Take a personal loan out in Australia and pay cash in thailand. Unless you are building a huge expensive house $40,000 -$50,000 Australian should be all you need. You could get that easy as a personal loan in Australia.

Also banks seem to prefer mortgage loans on the finished product here it seems. I think your husband is right they willnot give the money till the construction is finished.

Hi Lovelomsak

We could probably pay with cash but for various reasons borrowing is more suitable (We are both young and would like to save our big financial committments for western property).

I did the figures for a personal loan based on a budget of say B2million, which is about $70k AUD.

If we were to get a personal loan @ 10% over 6 years, thats roughly $1300 AUD per month ($15,600 p/a in repayments) versus $380 per month ($4,560 p/a in repayments).

As for not giving money until construction finished, that would be a pain. The website is ambigous, it says:

"4. If you build a home on your own land, mortgage loans are granted at not exceeding 100 percent of home construction cost but not exceeding 90 percent of appraised value of the land and building. The installment term is not longer than 30 years. "

If they didnt give the money until after construction complete, then the above reference has no utility since it would simply be a standard mortgage.

The solution is readily available, get onto "Skype" and get your husband to talk to the bank loan department one to one, you might be suprised how quickly he comes up with a solution to your problem!

[trogers]

Hi Lovelomsak

We could probably pay with cash but for various reasons borrowing is more suitable (We are both young and would like to save our big financial committments for western property).

I did the figures for a personal loan based on a budget of say B2million, which is about $70k AUD.

If we were to get a personal loan @ 10% over 6 years, thats roughly $1300 AUD per month ($15,600 p/a in repayments) versus $380 per month ($4,560 p/a in repayments).

As for not giving money until construction finished, that would be a pain. The website is ambigous, it says:

"4. If you build a home on your own land, mortgage loans are granted at not exceeding 100 percent of home construction cost but not exceeding 90 percent of appraised value of the land and building. The installment term is not longer than 30 years. "

If they didnt give the money until after construction complete, then the above reference has no utility since it would simply be a standard mortgage.

If you have the cash, finance the construction first. Construction will probably take 10-12 months, and thereafter, mortgage the house with land, and use the money to invest in western properties.

[blakegeee]

From what I understand, the bank will give you money for construction one step at a time. Obviously you have to make arrangements with the builder that after phase 1 of the build, you/the bank will pay a set amount, then after phase 2, the bank will provide the money to pay for that phase, etc and so on. I guess with the trouble people often get in with builders the bank doesn't want to be out the whole amount at one time. They want to be sure the work is being done, the property value is going up before they put up more money. So its basically "build first, pay later" but in a step by step kind of way. I would guess the build would be divided into about 4 stages and payments depending on the specifics of what you are having done. I hope this helps clarify things. It wouldn't be a bad idea to have the husband phone them up through skype or a cheap phone card for more details. They seem to be fairly easy-going about lending money for houses. We are also currently looking into both a house on land, or land and building a house. Choke dee!

[lovelomsak]

Hi Lovelomsak

We could probably pay with cash but for various reasons borrowing is more suitable (We are both young and would like to save our big financial committments for western property).

I did the figures for a personal loan based on a budget of say B2million, which is about $70k AUD.

If we were to get a personal loan @ 10% over 6 years, thats roughly $1300 AUD per month ($15,600 p/a in repayments) versus $380 per month ($4,560 p/a in repayments).

As for not giving money until construction finished, that would be a pain. The website is ambigous, it says:

"4. If you build a home on your own land, mortgage loans are granted at not exceeding 100 percent of home construction cost but not exceeding 90 percent of appraised value of the land and building. The installment term is not longer than 30 years. "

If they didnt give the money until after construction complete, then the above reference has no utility since it would simply be a standard mortgage.

If you have the cash, finance the construction first. Construction will probably take 10-12 months, and thereafter, mortgage the house with land, and use the money to invest in western properties.

I feel trogers got it right on. After construction the amount you mortgage can be regulated by you to some degree. So if you chose you can perhaps get a mortgage greater than your cash investment. This would then give you even more money to invest in western properties. Or go the other way get a mortgage less than what you invested to give you smaller payments and stronger cash flow for western investments. And either way it is less than a year to complete.

Edited March 3, 2010 by lovelomsak