Farang Friendly Banks

[sibeymai]

I'd like to buy a house in BKK (in the Thai wife's name, of course). Have gone through the process once and been rejected after having met all the published criteria regarding valuation of the property, ability to repay, steady income, savings and assets etc. Admittedly, the wife's salary doesn't go near meeting the repayments, but combined we have no problem.

The bank said since we are legally married our combined income will be considered. However, I have it unofficially from a source in the bank that the loan was declined because my wife could not service the loan on her own if we were no longer married.

If this was official bank policy in Thailand then no farang/Thai couples could ever own a house unless for cash. But surely that's not the case.

Does anyone know of a farang-friendly bank who will treat us as a couple ? Would help if you can provide the name of the bank, branch location and the name of the person I need to speak with. I know we meet all the criteria, just would like to be treated fairly.

[steveromagnino]

I'd like to buy a house in BKK (in the Thai wife's name, of course). Have gone through the process once and been rejected after having met all the published criteria regarding valuation of the property, ability to repay, steady income, savings and assets etc. Admittedly, the wife's salary doesn't go near meeting the repayments, but combined we have no problem.

The bank said since we are legally married our combined income will be considered. However, I have it unofficially from a source in the bank that the loan was declined because my wife could not service the loan on her own if we were no longer married.

If this was official bank policy in Thailand then no farang/Thai couples could ever own a house unless for cash. But surely that's not the case.

Does anyone know of a farang-friendly bank who will treat us as a couple ? Would help if you can provide the name of the bank, branch location and the name of the person I need to speak with. I know we meet all the criteria, just would like to be treated fairly.

I cannot recall the exact people I spoke to, but I know that Tanakarn Tanachart were falling over themselves to lend to me and I am not married and don't carry a Thai passport (although admitedly I am 1/2 Thai).

A colleague on this board went and got a loan from SCB.

And another couple of people also off this board have PMed me and also got loans from their banks.

You should not have too many problems, just ask around a few banks...may I ask whether you are in BKK or upcountry - in BKK the divorce rate is (at a total guess) perhaps different to upcountry where the earning rates of the husband/wife and perhaps tending to be far different? (i.e. in BKK many of the Thai wives are earning ok money, upcountry,,,maybe less decent money).

[Phil Conners]

How big a part of the value were they able to get?

SCB told me they generally offer 50% morgage to foreigners without work permit. With a WP the rate was much higher, 75-80% I think.

[steveromagnino]

How big a part of the value were they able to get?

SCB told me they generally offer 50% morgage to foreigners without work permit. With a WP the rate was much higher, 75-80% I think.

That would sound about right or maybe high, although I don't know if you can get a loan without a work permit unless you could show some sort of earnings offshore.

I got a little over 50% but that was all I needed. The other guy I nkow of who did it with SCB got 70% about with a work permit, no wife involved.

A lot depends on the application approach; speaking Thai of course and being nice works wonders; it is within every bank manager's discretion to be a pain in the a$$ and when I worked for a bank overseas, I know we would to people who were asking for answers with not enough time, being unprofessional re. lack of funds etc etc...

[sibeymai]

I was after 80% of the purchase price. I have been here 18 months, 12 with a work permit. 80% is the maximum this bank allows, even for Thais. The house is in BKK. SCB is not an option. I want the loan over a longer term, I think their maximum is 10 years.

Haven't given up yet !

[Galong]

And yet they'll give money to a Thai national with a fraction of the qualifications as us bread eaters... go figure.

[sibeymai]

I do have to admit to being a bit dumbfounded......with the amount of NPLs Thais are responsible for I'd have thought they'd throw money at what is virtually a sure return.

[NotaNutter]

In my experience the maximum loan period (for a loan guaranteed by a foreigner) is 7 years, although some banks may stretch this to 10 years if you are a particularly good customer. If you can accept this loan period then SCB is the bank I suggest you try first.

[steveromagnino]

And yet they'll give money to a Thai national with a fraction of the qualifications as us bread eaters... go figure.

OK, I have to bite.

Please explain to me, an ex banker, and currently a consultant to one of the largest financial companies in the world, why you feel you, as a non-Thai national have far more qualifications than a Thai in Thailand with security held over a Thai property.

Please specifically address the aspects of:

- your ability to move offshore whenever you want and why you think this is irrelevant for a lending institution

- the ability of your good self to obtain property here singlehandedly for which a bank can hold as security when a foreigner cannot own land

- why your income of e.g. 100,000b per month is much better than an equivalent Thai with the exact same income who does not have the ability to move abroad

- your knowledge of the lending criteria of ANY bank that is willing to lend significantly more than 70% for a Thai lender vs. a foreign lender with the exact same paperwork.

I think you'll find the answer lies in the following issues:

- foreigners can walk away, and banks are not property brokers

- foreigners cannot own land and therefore the bank has problems getting security for that asset

- foreigners don't necessarily have a credit record going back a while

- may foreigners have no local evidence of income, no work permit, no retirement visa and therefore no guarantee that they will be around for the next 25 years to pay it off

Sibeymai - you state....

'I do have to admit to being a bit dumbfounded......with the amount of NPLs Thais are responsible for I'd have thought they'd throw money at what is virtually a sure return.'

Foreigners are FAR from a sure return... with no security over the property which in the case of land a foreigner cannot own why should they be thinking it is a sure return?????! And for apartments, well a bank manager has to factor in flight risk, same as a bank in NZ does with say a Korean home buyer. Since banks often assume they can get 60% (NZ lending practice) of the value of the property if it came to a mortgagee sail, why bother taking the risk when there are plenty of Thais who cannot easily run away overseas?

And for the Thai wife western husband? There is enough anecdotal evidence to suggest a TON of these relationships end up in tears, and in some of the relationships, the husband has been carrying the wife, who walks away from the property....banks aren't as stupid as you might think. Well, actually they are, but they are indeed risk averse.

NPLs???? You comment as if Thai people are a homogeneous group and are all in cahouts <deleted>?!! there are lots of reasons for NPLs (many commercial) but mostly they stem from bank incompetence; the banks are smarter now and not lending to high risk customers for the most part.... foreigners can sometimes be one. For some who are not, well the ones I know had no problem getting loans much the same as their Thai counterparts.

Notanutter, with the right paperwork , foreigner (farang or otherwise) can get more than 7 years, I think I was offered 15. At today's interest rates that is enough.

There is so much rubbish in this thread, if you don't have a mortgage then offer useful advice of FO.

[OldAsiaHand]

I was after 80% of the purchase price. I have been here 18 months, 12 with a work permit. 80% is the maximum this bank allows, even for Thais. The house is in BKK. SCB is not an option. I want the loan over a longer term, I think their maximum is 10 years.

Haven't given up yet !

A problem to watch out for is that the loan-to-value ratio numbers everyone is throwing around here will not necessarily get you a loan amount you are happy with.

I know of numerous instances of a bank cheerfully offering a 60% or 70% or even 80% loans, and the borrower his quite pleased until he finds out that the percentage is based on valuation, not purchase price. And Thai lenders, without exception, low-ball valuations. Improvements, for example, generally have no value. The nicest apartment in town will be valued at exactly the same price as it were a bare shell without any improvements at all.

My experience is that, as a rule of thumb, a qualified foreigner (without personal connections to lean on the lending process) can expect to borrow about 50% of the real cost of purchasing a residential property here. Not a heck of a lot more than that.

[Chaengwattana]

Try Bank of Asia.

My wife (not registeret) just got a house loan in BoA.

The bank doesn't know that i exist so i can't tell you if it is farang friendly or not.

But BoA was 30% more generous than Bangkok Bank and Siam Comercial Bank

[Gary A]

What kind of interest rate are the banks asking for and how is the loan structured? Is there an early payoff penalty?

My wife looked at a car loan and it simply took the cheap interest rate 3.75% and multiplied the amount borrowed over 60 months. You pay interest on the entire amount borrowed over the life of the loan.

[bendix]

well said, Steve. I think some farang think that their white skin (in a dark country) gives them a right to anything they ask for.

It's frustrating - as a farang - to have obstacles thrown up in getting loans here, but from a lender's perspective it's justified. I choose to live here. I have to accept that the flexibility that allowed me to come here also makes it easy for me to default on any loan I decide to take out. Lenders know that; hence the obstacles.

Seems fair to me.

[steveromagnino]

Seems fair to me.

thanks mate :-) I hope that you aren't worn out from dancing like that, it sure looks tiring

Regarding Asia hands comment, yes this is a major deal. Of course, all banks like to have a valuation and then lend on that, but in Thailand, particularly for housing developments the values that the bank's valuer comes up with are often markedly different from the value that the property is on sale at.

e.g. a B quality centrally located building where units have been selling consistently for 35,000b+ per sq m over the last 3 years with the lowest ever recorded sale in the building at 30,000b sq m in 1999 when the development was completed; the unit is sold at 33,000b sq. m; approach a bank who values the apartment at 22,000b sq m; far lower than any previous price.

Then the bank states they are happy to lend up to 70%, but on the 22k sq m price.....

So, you have to figure that bit as well.

Banks can be dastardly, I recall our parent company in the bank I worked for (which was also a bank) deciding that ALL mortgages for apartments country wide had a new policy so while TV advertising was running showing people able to borrow 90%!!!! of the value of their new house, apartments could borrow a massive 50% and ONLY if the person was living in it.

Actually, let's think, what else did we do... anyone borrowing over 75% had to pay additional application fees and a higher interest rate, 50 basis points I think up to 90%, other banks had as high as additional 250 basis points and you could borrow up to 95%....hmm... methinks if you don't have enough deposit to come up with 25%; unless you have big earnings and have decent job security, better to save a little longer and buy when you do.

Rental property notwithstanding of course, where 100% borrowing is the order of the day if possible.

For the 80% 1 year work permit.... for sure they will look very carefully at your work history, income and duration of the loan. I cannot see you getting this unless it is a very big investment (e.g. 10-50m baht) and you have some major personal connections. If it is direct from the developer, they may be able to offer you help with the connections, many developments have that. If it is secondary market, I just cannot see you being able to do this deal sorry.... but good luck with that. Have you considered something a little cheaper?

[bendix]

This is a subject close to my heart at the moment. I'm looking to buy property here. I could pay cash, but would prefer to keep liquid and am looking at around a 50% loan instead.

Yesterday I asked my PA to call some of her bank contacts just to test the waters about if farang can have a mortage.

The first lady she called, at Bkk Bank, said no way. Evidently, she said, I have to be married to a Thai. Go figure.

The second lady at HSBC said no also. My PA was pretty vague on this, but she explained I needed to get a loan from overseas etc etc. She also said I needed to be here for three years already. Huh? yeah, right.

Late last night, however, a more senior HSBC called my PA back and said . . . 'ahhhh, but this is Thailand. . . I'm sure we can help your boss out somehow.'

Which just goes to show. There are rules which make it difficult, but as in all things Thai, where there is a will, there will be a way. And, of course, it completely depends on who you happen to be lucky or unlucky enough to talk to. They're sending someone around tomorrow to discuss in more detail.

TIT :-)

[steveromagnino]

Try Tanakarn Tanachart and SCB; BBL are <deleted> hopeless (my boss's son is a big wig here and one of my former clients is part of the Sophonpanich family running the bank now so this is like the best connections you could have and they still couldnt' help me even though I bank with them?!); HSBC are surprisingly useless in my dealings with them - I got more joy with these other two.

best of luck :-)

Depending on if you are buying from the developer, they may also have lots of contacts. Incidentally, it is commonplace to be able to do deals with the apartment developers at the moment, I know several people who have cute some pretty great deals in good buildings.

Edited February 23, 2006 by steveromagnino

[rcalsop]

I am always at a disadvantage because I have never had the problems refusals or frustrations that many people seem to have . When we bought our first house I was not even working in Thailand .

SCB were superb we filled in the standard papers and although I know my wife owns the land all papper work , life insurances etc were in joint names . The second house we bought when I was working here was the same we just asked the questions politely and SCB staff were great no delays no stupid questions ,time terms up to 20 years ,no issue !. The land registration office took both our names on every document , took my tax references so I claim tax relief on the mortgage , and too all intents and purposes it appears like a joint purchase . Before you flame me I know farangs cannot own land etc but the experience had all the hall marks of preparing for a potential law change ( that was my feeling at the time ).

So Siam Commercial Bank ..no issues extremely helpful , arranged everything , infact easier ,quicker and smoother than UK purchases and we did not need a lawyer of special notary .

Since that time 14 months ago the bank has asked us if we want any more cash/ credit .

[DAS]

I'd like to buy a house in BKK (in the Thai wife's name, of course). Have gone through the process once and been rejected after having met all the published criteria regarding valuation of the property, ability to repay, steady income, savings and assets etc. Admittedly, the wife's salary doesn't go near meeting the repayments, but combined we have no problem.

The bank said since we are legally married our combined income will be considered. However, I have it unofficially from a source in the bank that the loan was declined because my wife could not service the loan on her own if we were no longer married.

If this was official bank policy in Thailand then no farang/Thai couples could ever own a house unless for cash. But surely that's not the case.

Does anyone know of a farang-friendly bank who will treat us as a couple ? Would help if you can provide the name of the bank, branch location and the name of the person I need to speak with. I know we meet all the criteria, just would like to be treated fairly.

My wife and I borrowed 1 million baht from Bangkok Bank when we bought our house in Kalasin. 10 year loan without a Work Permit,no problem. My wife doesn't work so my retirement pay is our only income (about 75K a month). The fact we were buying the house from the Loan Officer might have been a factor though. He did try to buy it back from us later after he saw how we fixed it up. Sorry!!

[Chaengwattana]

What kind of interest rate are the banks asking for and how is the loan structured? Is there an early payoff penalty?

My wife looked at a car loan and it simply took the cheap interest rate 3.75% and multiplied the amount borrowed over 60 months. You pay interest on the entire amount borrowed over the life of the loan.

Im sorry but i don't know. I have been out of Thailand for the past 3 month and my wife handled evrything. Everything was settled just 2 days ago.

I checked www.bankasia4u.com but the homepage doesnt work.

About the car loan.

The structure sounds exactly like the car loan my wife had with GE Capital. According to my wife that is standard in Thailand. First she started to pay back the interest and then the principal of the loan.

[Neeranam]

Interesting thread. So, I could borrow money from my bank to buy a new car? I have a work permit. They did refuse to give me a credit card, but would they give me a loan?

Would I be better off doing this?

Sorry, I'm not a 'bread head' so know little about finances.

Bangkok Bank, Kasigorn .

[rcalsop]

Interesting thread. So, I could borrow money from my bank to buy a new car? I have a work permit. They did refuse to give me a credit card, but would they give me a loan?

Would I be better off doing this?

Sorry, I'm not a 'bread head' so know little about finances.

Bangkok Bank, Kasigorn .

I got a credit card no hassel easier than UK and higher credit limit , plus when I arranged the Mortgage with SCB they gave me a credit card ..their suggestion ...we arranged that one for my wife ... ie we say it is hers and we fixed a lower limit . The car loans are easier to arrange through the car dealer in my experience.

Sorry I forgot to mention in the last two posts I said I SCB is great no hassels ...I forgot to point out I did not bank with them and evn now I still only have a simple almost dormant account just to facilitate the Mortgage payments . My salary is paid into BKK bank ..I have to my company pays salaries in BKKB ..plus my Boss`s father is a senior board director of BKKB and her husband is an ex director ..the bank BKKB useless ....and I frequently express that opinion openly ... not well recieved .but the truth from my experiences that is why when I wanted a mortgagae I went to SCB first even though I had never banked with them but their advertised services looked progressive and sensible .

Edited February 24, 2006 by rcalsop

[sibeymai]

When I first started looking around for a loan I went to K Bank. Their response was they only lend to foreigners if a) the foreigner is married to a Thai, or there are Thai children for which the foreigner is recognised officially as a parent.

I wondered at the time what the women members of K Bank's board would think if someone told them to get a loan they must have a baby. I'm sure the imposition of this condition violates a woman's basic human rights.

The girlfriend and I married as we disagreed with the bank's view that wanting a loan was a justifiable reason for creating new life.

After submitting the loan application and paying a fee for valuation of the property, which was valued at significantly more than what we are paying, K Bank wrote us a nice letter declining our application and refusing to provide a reason for doing so.

Consequently, today I no longer do any business with K Bank, including not using their ATMs.

BKK Bank is currently being far more helpful, offering to loan up to 60% (or more) of my salary when the usual limit is 40% for a period of 20 years. There are several options for interest rate reductions over the first 1, 2 or 3 years with 3.75% for the first year being the most attractive. There are penalties for early repayment during the first 3 years but after that the loan can be paid out with no penalty. After the discount period the current rate is 6.75%. When calculating repayments and affordability BKK bank use 8% to factor in some excess.

As far as earlier comments on banks being risk averse, understood. However, the bank will have security over the property which is in a Thai national's name. If I disappear for any reason then the bank sells the property as mortgagee. They're not likely to loose any money having loaned no more than 80% of the valuation. This risk of having to do this justifies the interest the bank charges. If they do their homework there's no reason the bank should loose anything, regardless of the statistics for thai/foreigner marriages.

Perhaps the difficulties foreigners have in making a home in Thailand contribute in part to the stresses which cause the relatioship failures.

[~G~]

sibeymai,

I hope you don't mind me asking, but if you need to borrow almost all of the sum, why do you want to buy the property at all? You will spend years and years paying interest, and it will not even be registered in your name?!

[sibeymai]

good point. Wife still gets everything (at least what's left after the bank takes their cut), it just takes longer this way.

[Meerkat]

We've been treated well by BKK Bank in Khlong Louang. Whilst we're not legally married, I showed them a copy of my contract (in HK) and they gave us a 10 year 60% mortgage on the spot. We make sure to give the girls there who helped us a liberal sprinkling of chocs/cosmetics now and again and they've told us we'll have no problems in the future either...

As is usually the case when borrowing from the bank, you'll always get lent the money if you don't need it!

We only took out the loan as the fixed interest rate was ridiculously cheap. As has been posted here, the loan reverts to a regular floater after 3 years (although we were quoted MLR+200bp so currently 8.75% rather than the 6.75% Sibeymai quotes), but seeing as we're paying the loan off at that 3 year period it's academic for us.

[trajan]

Try Tanakarn Tanachart and SCB; BBL are <deleted> hopeless (my boss's son is a big wig here and one of my former clients is part of the Sophonpanich family running the bank now so this is like the best connections you could have and they still couldnt' help me even though I bank with them?!); HSBC are surprisingly useless in my dealings with them - I got more joy with these other two.

I had the exact opposite experience....my dealings (directly, or via a secretary or PA) with the big establised local banks were completely useless (like dealing with antiquated government bureaucracies with lots of extraneous narrowly-trained pencil-pushers and rubber stampers..not user friendly or customer-oriented at all.. (maybe the newer smaller banks like Tisco, Kiatnakin or ACL are hungrier, stream-lined and user friendly)...(not sure if the new retail banks like LH Bank or GE Money can extend mortgage loans)....

however, I found HSBC to be VERY helpful (even though I did not previously bank with them)...in fact I didnt need to even leave my office, they came to me with all paperwork, explanations etc. and I have no "big-wig" connections....

they used an outside appraisal firm to value my desired condo (I had to pay the appraisal fee which was just over B6,000) and they lent me 70% of the appraised value. The appraised value was pretty close (86%) to the actual purchase price. So I ended up borrowing about 60% of the actual purchase price.....

they provided a 10 yr term loan (which is much shorter period than a loan extendable to a Thai national) but that was acceptable to me ... (although a 15 yr term would have been preferable, it was not possible for some reason)....

I would imagine that Citibank, Standard Chartered and maybe UOB are just as user friendly, efficient and internationally-minded, but just guessing on that.....

Edited February 24, 2006 by trajan

[bendix]

I think what this thread shows is that - as in most things Thai - there is no standard experience and depends entirely on the mood of the person you're meeting, the alignment of the stars, and the spiciness of the som tam eaten for breakfast that morning.

TIT

I got my call from the senior person at HSBC. "Oh no problem at all, Khun Bendix. yes, I'm sure we can provide a home loan for you."

I then get transferred to a (presumably more lowly) loans officer.

"Mai dai. You are farang with no wife. Mai dai. Mai dai ka."

I guess this is because as a 'line person' she has to follow the rules more, whereas the more senior person can bend them.

I ask to speak to my original caller again. "Cannot. Me no know who that is."

I GIVE UP. I think i'll pay cash . . . .