Can One Leverage Property To Buy Another?

[corkman]

Dear All,

I would like to buy a home in Bangkok. I would have no problem paying a mortgage, it would be comparable to my current rent, but raising a substantial 20-30+% deposit is an issues for me.

I would be planning to buy it in the joint names of myself and my wife of 10 years, who is Thai. I am not that worried about how this needs to be set up, farangs not allowed to own land, Thai's getting favourable mortgage conditions etc. We just want to buy our own home, and need a mortgage for it. whether it is in her name, my name, both our names, the kids names, or any combination - I don't mind. I would prefer a house but would consider a condo, if a condo was the only way to home ownership.

We (well technically my wife) own some property in Isaan which I estimate to be worth about 1MB (based on market values and feed back from locals). This comprises a lump of farm land (7 rai) and a plot in a muban with a western style house. In total it may in fact be worth more.

I don't know much about financing or leveraging etc. but I was wondering is it possible to leverage the property we own (no money owed on this) in lieu of a 1MB deposit needed to buy a place in Bangkok? Or is there any other way to access the capital in this property to the same end (aside form outright selling it). I could raise a small cash deposit to go with this porperty capital - say 100k THB.

My wife does not work - she is a full time housewife and mother. She could get a letter from some small business saying she earns 20,000 per month as a book keeper or something - but I doubt that is going to help??? We already have car finance (in my name with her as guarantor) so have good credit history for 12 months etc. I have been working in Thailand for an interantional company with all the correct work permits and visas etc. - my salary is such that I could easily meet the criteria for a mortage on a house twice the size that we are consdiering (if I had the deposit of course).

I don't want to walk into the bank and make enquiries - I already know what the mindless slave girl at the desk will say...... "mai dai" with a blank bewildered look on her face. I am not adverse to getting professional help on this, if what I am suggesting is remotely feasible.

Many thanks in advance fo your input.

Edited March 28, 2012 by corkman

[PattayaParent]

You could mortgage the properties up country to a bank but they probably wouldn't give you the full value.

Can't you save a couple of months salary to pay the deposit?

[corkman]

You could mortgage the properties up country to a bank but they probably wouldn't give you the full value.

Can't you save a couple of months salary to pay the deposit?

Wish I could (save that is). Its a combination of can't and won't. I am currently ploughing cash into an off shore mortgage - "leveraging" our assests here is as much about "owning our own home" as it is about I'd rather be paying down a mortgage than paying rent. Pretty much all my income is in some way either servicing existing (investment) debts, directly invested in tax mitigation schemes here, or spent "living". The Isaan property is as such not working for us at the moment - hence why I am trying to see can I leverage it which would allow me to redirect capital currently spent on rent to being spent on an investment home.

I'll look into the mortgaging of the properties - thanks for the suggestion. Sometimes the most simple solutions are the hardest to see. Any idea what rates I'd pay on this (interest)? If I got say 80% of the value at a reasonable rate, then offset that against long term gains on purchase versus rent, it may well be justified. For all intents and purposes it would be like getting a 100% mortgage on the Bangkok home we would like to buy.

Edited March 28, 2012 by corkman

[ballbreaker]

Seems to me you should pay off existing debt before putting at risk a property that is owned free and clear.

A move like you propose is how many people lose everything they own should employment end abruptly.

[dave111223]

You can get a "western style house" and 7 rai in Issan for 1 Mil? Holy crap stuff is cheaper up there.

In my experience no bank is going to want to hear about you using other properties as collateral.

Your best bet would be to try to get a separate home equity loan on your property in Issan, then use that money as downpayment for your new property.

Or you could buy a house in a new development; generally the developers has a relationship with a bank and can set you up with a very low downpayment.

[bkk_mike]

The low downpayment tends to be for Thais (or at least those that earn in Thailand.)

i.e. My wife who doesn't work managed to get a mortgage here (with me as guarantor using my Hong Kong salary for proof of income.)

But we were looking to borrow less than one year's salary, but it still required a 20% deposit where a Thai couple could get away with 5-10%.

[Soutpeel]

The low downpayment tends to be for Thais (or at least those that earn in Thailand.)

i.e. My wife who doesn't work managed to get a mortgage here (with me as guarantor using my Hong Kong salary for proof of income.)

But we were looking to borrow less than one year's salary, but it still required a 20% deposit where a Thai couple could get away with 5-10%.

Mrs Soutpeel got a 100% mortgage (THB 3.0 million) through SCB a few years ago with myself as a co-sign, she wasnt working and we were not even legally married at the time.

All SCB wanted to see was 12 months of my payslips, a letter from the company saying I was employed by a Thai entity and copies of my WP/PP...whole process took 6 weeks and the cash was paid over...my total cost THB 55,000 (for application fees and some other fees)

Edited April 2, 2012 by Soutpeel