Random RCBO Trip...What Next?

[beswick]

Dear Forum,

Could somebody please teach me the basics of getting a mortgage (not just in Thailand but in general).

What sort of questions should I be asking the bank to find the best deal? I don't understand how they charge the interest? For example, if I bought a house for 5,000,000 bht and the interest was fixed at 4.5 percent, would they charge this for the total amount over the period of the loan i.e. 30 years or would they charge it on the remaining money each year as the loan will be decreasing?

Also, what other questions should I be asking the banks to get the total cost of taking out a mortgage with them. I want to get the best mortgage deal possible.

Some help explaining this would be greatly appreciated. The mortgage won't be in my name as I know about Western ownership etc.

Cheers,

Bes.

[givenall]

This is how mine was and I think all banks are the same here.

It is commanded interest rate, meaning you are only charged the interest on the money that is left, so if you have 5,000,000 at first you pay interest for 5m and let’s say next month you decide to pay a big chunk like 500k payment then the interest you pay is on the 4.5 m

Also there are no fix rate mortgages, you have fix rate for 3 years and then after that is valuable rate index to banks borrowing rate, and mine started at 3.5% and now is 5.0% , 4^th year into the contract.

What means is that if I only pay my payment then at higher rate I have to pay more than 30 years to payoff the house, but it lets say by any chance (unlikely) the interest rate goes down to less than 3.5 then I payoff the house in less than 30 years

[dave111223]

Also there are no fix rate mortgages, you have fix rate for 3 years and then after that is valuable rate index to banks borrowing rate, and mine started at 3.5% and now is 5.0% , 4^th year into the contract.

What means is that if I only pay my payment then at higher rate I have to pay more than 30 years to payoff the house, but it lets say by any chance (unlikely) the interest rate goes down to less than 3.5 then I payoff the house in less than 30 years

You must have got a pretty good package if you are still getting MLR-more than 2% into the 4th year.

To the OP; I have never seen a bank offering a fixed interest rate here. They will offer terms based on MLR; which is the variable "Minumum Lending Rate" that the bank sets. Banks all pretty much set the same MRL (give or take .5% or so).

MRL is currently about 7-7.5% depending on the bank. If you're "mortgage" is something higher than MLR you are probably applying for the wrong thing (such as a SME loan, or personal credit line etc...; home loan should always be MRL or below)

Most banks will offer a loan package with a discounted interest rate for the first few years. So they may offer you "MRL-3% for the first 3 years; then MRL-.25% for the life of the loan".

They will calculate you a fixed monthly payment amount. The amount will stay the same, but because interested is variable the life of the loan is also variable (may take you 30 years to pay off a "20 year mortgage"). It is possible to get into a situation where the monthly payment does not even cover all the interested (meaning your loan would increase each month); at which point you would arrange a higher monthly payment.

Interest paid each month is based on the principle outstanding; anything paid over the interested is deducated from the principle. You can pay down the loan at any time, but cannot pay it off completely until usually 3 years (or pay a 3% penalty fee)

Also be careful to ask about all fees and insurance costs. Some banks will make you purchase 15 years worth of life and fire insurance upfront, which they add onto the loan (this can be hundreds of thousands).

Edited January 2, 2012 by dave111223

[Pib]

Go to this Bangkok Bank link with emphasis on reviewing the "Related Links" in the right hand, lower corner of the page. The links provide a loan calculator, lending criteria, documents needed, Home Buyers Guide, FAQ, etc. Good luck.

[aurelius]

Interest paid each month is based on the principle outstanding; anything paid over the interested is deducated from the principle. You can pay down the loan at any time, but cannot pay it off completely until usually 3 years (or pay a 3% penalty fee)

Actually there is no penalty at any time for early repayment if you are paying with your own money; the penalty applies in the case of re-financing only.

[beswick]

Hi all,

Thanks for your replies, I found them very useful.

It seems that most banks want to know what company has built the house /condo before they can calcualte the MLR for you. Is that normal? I appreciate they are assessing the risk factor here.

I was a little bit confused by Bangkok Bank though as they want to see the house and all the documentation on it first before they give you any information on the amount they can loan you. Is that normal as none of the other banks work this way.

Also, I have come across CIMB THAI Bank, which offers 100 percent with an excellent 3 year MLR rate. Has anyone heard of these before?

Cheers,

Bes

Edited January 4, 2012 by beswick

[Soutpeel]

If you are farang here, you do know you will basically have very little chance to get a mortgage from a Thai bank in your own name ?

Typically needs to be in a Thai name and the you co-sign the loan

[aurelius]

Loan amounts over 10MB can only be for 70% of the value; under that and they can go higher, so probably your CIMB info is accurate.

[beswick]

Loan amounts over 10MB can only be for 70% of the value; under that and they can go higher, so probably your CIMB info is accurate.

Is this for all banks Aurelius and how do you know this information?