How do Mortgages in Thailand work?

[mja1906]

Am looking to buy a house soon with my Thai husband. Does anyone know what sort of mortgage rates there are out there? Any recommended banks/deals for mortgages? Also what are the mortgage rate systems, like in the UK where I'm from, there are fixed vs. variable rates. Any help/explanations much appreciated

P.s My husband seems to like Kiatnakin, as we have 3cars financed with them and is impressed with their service, and says they have good %rates (although not sure how true that is)

[daveAustin]

Same with mortgages everywhere, the banks bend you over.

Depends who the breadwinner is. If your husband, then you'd be able to go get the normal Thai rates and lower deposit requirement. The other way around, where most are farang blokes with Thai wives, you typically have to drop 50% and have it fixed over like 15 years (as opposed to 25 or more). But if you both had a regular income it would be easier. Found Siam Commercial Bank the easiest to deal with, just pop in and ask them. Get in writing that if you pay off the mortgage early it doesn't incur a penalty. A lot of banks here like to sting you on that.

[fletchsmile]

There's a lot of similarities to the UK system.

As a foreigner, the chances of them lending to you are almost zero. They will consider lending to your Thai husband with you as a guarantor though. That will likely mean the house would need to be in your husband's name guaranteed by you if relevant, as lenders usually want the mortgage name and property owner to match. Some people aren't comfortable with the idea the house is only in the spouses name, and is a difference to consider compared to UK.

Like UK, they have standard variable rates, various promotional rates and interest free periods are possible, and there are rates that are fixed for x number of years before reverting to variable rates.

We did ours with Standard Chartered - Thai wife guaranteed by foreign husband. At the time she could borrow up to 95% if under 10mio, and 70% if over 10mio, I believe the latter is now 80% above 10mio. Stan Chart have a product called Mortgage One I would have chosen at the time, which was not available when we did ours. Basically you have a mortgage and a savings account and they will offset the balances to an extent. They have another linked to credit card spending to reduce your mortgage - personally didn't find that such a good deal for us, but can be for big spenders who regularly clear their credit card bills each month.

Service at banks is variable. Some banks and branches better than others. Some more foreigner friendly. So like back home and as you're doing shop around.

Cheers

Fletch

Edited October 18, 2014 by fletchsmile

[Farma]

The banks also have online loan calculators.

Here's an example from Bangkok Bank http://www.bangkokbank.com/BangkokBank/WEBSERVICES/CALCULATORS/Pages/Loan%20Calculator.aspx

[Mark601]

Google the real estate agent Bobby Books in Pattaya. He can help you buy and get your financing, taken care of.

[marcusd]

I recently looked into this at Bangkok Bank Kad Suan Keaw in Chiang Mai where the Manager is proficient in English.

he told e there are many ways of mortgaging a property in Thailand and many ways are just scams.

he says BKK bank offers flexible mortgages like back in Australia which is similar to England. You must hold the mortgage for 3 years but after that you can pay it out with no penalty interest - as you pay on the number of DAYS you borrow the funds.

I would suggest staying with reputable lenders and as another poster stated Siam Commercial is also good.

[dabhand]

Google the real estate agent Bobby Books in Pattaya. He can help you buy and get your financing, taken care of.

As directed, I did a google on Bobby Brooks (note the spelling change) Real Estate Pattaya.

About half a dozen links from the top found a rather interesting news item which may, or may not be of interest to anyone thinking about taking this advice any further.

I would definitely second the comments of marcusd in only using reputable lenders.

[fletchsmile]

We had a 3 year fix before reverting to a variable rate for the remainder of the 10 years we went for.

We could and did make extra payments any time with no penalty. Just went into the payment function in online banking. The fact interest was calculated daily was very useful and can save quite a bit. We also paid off in full just after the fixed rate expired.

For penalties bank policies can vary. You are more likely to pay a penalty for:

- terminating in full during some sort of promotion or fixed rate period

- transferring the mortgage to another bank. Particularly within a set period of time.

Yes stick to banks if you can. There are other options but you need to be very careful on many levels. Aside from possibly being turned over some schemes do not fully comply with the letter and or spirit of the law and that can include ownership rules. Could put you in a very difficult position if something doesnt go exactly to plan in life.

Cheers Fletch

[AnotherOneAmerican]

Usually 2% for first year then 7% variable for the rest.

All the banks are much of a muchness.

Unlike other countries, Thai banks like to set a fixed monthly repayment and the length of the loan varies.

They almost all insist you take out their life insurance for approx 5% of the advance, paid out of the advance.

So if you borrow 2M over 25 years, they give you 1.9M + a life insurance for 2M valid 20 years.

You will need 6 months records of wage slips and bank deposits.

Edited October 19, 2014 by AnotherOneAmerican

[SGD]

Never went through with any mortgage but looked a number of times and each time came away thinking that the rates were a joke compared to elsewhere and really not correlated to either the cost of funds or risk. Quite a simplistic approach, as per the UK 20/30 or so years ago.

Discounts are usually poor and mostly off some high MLR (minimum lending rate)

SCB criteria http://www.scb.co.th/en/personal-banking/loans/home-loan/scb-new-loan

Kasikorn http://www.kasikornbank.com/EN/Personal/Loans/KHomeLoan/Pages/KHomeLoanKasikorn.aspx

Actual rates here http://www.krungsri.com/bank/getmedia/d791a109-4873-4793-bb34-0d83d64f5eec/Interest_Rate_Krungsri-Home-LoanQ42014.pdf.aspx

http://www.krungsri.com/bank/getmedia/d791a109-4873-4793-bb34-0d83d64f5eec/Interest_Rate_Krungsri-Home-LoanQ42014.pdf.aspx

e.g. According to the Bank’s announcement as of 21 March 2014, MLR is equal to 7.125% per annum.

So effectively, they have you locked into paying something around the 6% mark when elsewhere in the world you might be paying half this or better.

As ever with Thailand, I suspect they will say whatever they think you want to hear and that yes, you can have this and that but when it comes to the crunch, expect a swift reversal and a "no can do" mentality. I never got anywhere near feeling confident that I had all the information they wanted or qualified (not me personally) or that the people I spoke to actually knew what the true criteria were.

[Tboy928]

if you have some funds as foregner , and wanted invest in some appartments , do they give a loan, with warranty / value in the appartment ?

[Loles]

So, you have a Thai husband, and you ask here about the Thai mortgage rules.

Why don't you ask him and share your answers here with us who has not any Thai spouse?

[AnotherOneAmerican]

So, you have a Thai husband, and you ask here about the Thai mortgage rules.

Why don't you ask him and share your answers here with us who has not any Thai spouse?

She's checking hubby is telling the truth?

year 1 2%, all other years 7%, maximum length of loan until hubby is 65.

25k/month income gets you a 1.5M loan.

The differences in rates and conditions between banks is negligible.

Edited October 19, 2014 by AnotherOneAmerican

[fletchsmile]

Just one note on the minimum lending rates (MLR) compared to the UK, which is different

UK uses their base rates and banks tends to quote a reference rate X + (plus) to arrive at whatever % is their "normal rate". Not unlike US which uses its Prime or best normal rate then adds on a % according to credit

In Thailand the word minimum is misleading. It's just a reference rate. It is very common to get MLR - (minus) whatever % as their "normal rate".

Also individual bank's have quite a few of these acronyms within their own bank rate, eg a single bank can have MHR, MLR, MOR etc. Just look at them as reference rates.

Cheers

Fletch

[yankee99]

i am happy to see they calculate mortgage the same as the west unlike auto loans

[naboo]

We got a step up interest deal, 1.5% year 1, 3% year 2, 4% year 3 then MLR -0.5% for the remainder. We had to buy 25 years of fire insurance for about 20,000B which they put onto the mortgage for us.

With Government Savings Bank who gave us an 80% mortgage based entirely on my wife's earnings, absolutely nothing to do with me in theory. We are in year 2 and currently overpay. Over-payments incur a fee of 10% if made within the first three years, so I should really stop overpaying now.

It took four months to get approval. The seller in our case suggested we offer a bit of tea money to speed things up. I told her that if she was in a rush, she could go and offer some tea money, but it was highly offensive in my culture to do so. I hated that woman from the first phone-call my wife made.

[mja1906]

So, you have a Thai husband, and you ask here about the Thai mortgage rules.

Why don't you ask him and share your answers here with us who has not any Thai spouse?

Because my husband is not financially inclined, as doesn't know anything about how mortgages work. Of course if he could shed some light, then I wouldn't be asking on here!

[MAZ3]

Usually 2% for first year then 7% variable for the rest.

All the banks are much of a muchness.

Unlike other countries, Thai banks like to set a fixed monthly repayment and the length of the loan varies.

They almost all insist you take out their life insurance for approx 5% of the advance, paid out of the advance.

So if you borrow 2M over 25 years, they give you 1.9M + a life insurance for 2M valid 20 years.

You will need 6 months records of wage slips and bank deposits.

That's exactly the deal my girlfriend and her Dad has with K Bank,including having to take out life insurance on her Mum(who's NOT on the mortgage). Was 2% and this month goes up to 7%,not sure about if its daily interest and any early repayment penalties

[mja1906]

So we went to Kiatnakin and Kasikorn today, here's what we found out

Kiatnakin) whilst their interest rates tend to be on the lower side (they also use MLR instead of MRR which is lower) they can only loan up to 80% of land+house price. They have a brochure with a nice table showing principle loan amount+length of loan and how much monthly payments would be.

A quick look at this compared to if we took the mortgage directly with the housing project (they also have a similar table showing monthly payments) indicated to us that Kiatnakin would end up more expensive. Anyhows, it turns out we can't afford this because they only loan up to 80% and we can't make up the remaining 20%

Kasikorn) Currently have 6 promotion types (will only show first 3, as the remaining are not popular or as cost effective). The bank lady plugged into their online calculator system, various factors (how much we want to borrow, time length of loan, whether the housing project has a deal with the bank, etc. ) and it came up with:

1. First 1 yr @ 1.25% , MRR -1.75% remainder of term

2. First 2yrs @ 3.75%, MRR - 1.75% remainder of term

3. First 3yrs @4.5%, MRR -1.75% remainder of term

The calculator showed us that monthly repayments until the end of term, would be 27.3k .

I was a bit confused when she said the that monthly payments would always be the same at 27.3k, no matter what promotion we choose (so whats the point of having different promotions?), but then she said most people choose to pay the same monthly amount from start-end, rather than the discounted amounts in the first 3yrs, as in the long run you pay it off quicker, so its cheaper

I asked if we could pay more in some months (overpay), and she said yes, and there would be no penalty, and the term would be quicker.

They will also loan 100% of the land+house price, because they have a deal with the housing project.

So, that's what I have found out, and is pretty much in line with the posts above.

It seems to be fixed rates (3yr promotion period) after which its variable based on MRR.

Agreed with AnotherOneAmerican, seems that Thai banks just vary the length of the loan, rather than the monthly payments

So if MRR goes up, I can only expect to be paying for longer (?)

Yes, Thailand still seems very expensive considering right now the MRR is about 8.1% (and saving rate is basically nothing?). I can only hope the MRR goes down in the future? Not sure how likely that is.

[joboss]

So, you have a Thai husband, and you ask here about the Thai mortgage rules.

Why don't you ask him and share your answers here with us who has not any Thai spouse?

Because my husband is not financially inclined, as doesn't know anything about how mortgages work. Of course if he could shed some light, then I wouldn't be asking on here!

Thank you for asking. I have found the replies informative.

[steveromagnino]

There is not really a difference for foreigners borrowing with Thai wives to foreigners borrowing with Thai husbands; there is a big difference in terms of anyone borrowing relating to their earning power; since many Thais have low/no/unproven incomes, the mortgage system relies on large deposits and guarantees; the system is set up so banks really want to see salaried employees, same employer for at least 2 years (minimum is 1 and less than 1 is almost impossible) with decent earning power. I'd guess based on the people I know, that the foreign women with Thai husbands on the whole are more likely to have a Thai partner with a proven income salary, than the Thai women I know married to foreigners. However, on the whole matters not, it only matters in your particular circumstances and there are plenty of foreign men married to Thai women where the wife make massive salary here.

Borrowing is usually calculated at payments with a maximum of around 35% of total monthly income, based on proven documented payslips. You can push this up higher to almost 50% if you really work at it, but then they would like to see decent transaction size; it is perversely often easier to borrow big amounts with big income than small amounts with small income; the reason being that expensive properties in Thailand (I will come to that in a moment with regards to liquidity) are mostly bought without borrowing, so the risk profile is better for the bank, plus the profitability is better (there is just as much work to write a 1m baht mortgage as a 10m baht one). No kids and no expenses and no financed car etc tends to allow you to push above 35%.

You then can fiddle the term to get to a highest possible number; long term with a higher percentage of your income means you can afford a higher price now. I had previously managed to get a 5 year term, but I doubt you could get shorter - maybe early payment without penalty but then you'd need to be buying something worth enough to make it worthwhile for them to customise the mortgage for you - difficult I think. 10,15,20 are all standard common terms, no doubt 25 is also possible.

Ok, so how much can you borrow as a proportion of the property value? Usual rule of thumb is 80% maximum, although I have recently had offers up to 100% (I have a decent income and a fairly reasonable networth) - however there are a few catches. 100% is allowed (through a zigzag) below 10m, 80% (AFAIK) is the maximum above 10m baht properties, and 80% is appraised on the market price, not the selling price, calculated by the bank. This inherently makes publically listed property company property worth more than small no name no reputation properties in Nakhon Nowhere; the bank wants to know the market price, somewhere like the Met (Sathorn) as an example (note I don't own there and never would) is an ok building, has plenty of liquidity, the bank is comfortable accepting valuations very close to what you pay for the unit (unless you are overpaying) so 80% borrowing works out somewhere around 70-85% for the most part (usually not more than 80% though). Choosing Somchai Deeluxe Hovel in Onnut on the other hand, with 12 units, they might appraise the value of the property (worth in the market 3m) at only 2m, or even 1.5m, meaning you can only borrow 80% of 2m or 1.5m. They don't know it, they haven't visited it, they don't know who built it and information is lacking on what it is worth, so they estimate extraordinarily conservatively; given the price of 2nd hand property and lack of transactions in subprime their conservatism is appreciated (speaking as a shareholder). This is part of the reason why larger developers do better; the banks know the projects better (often having financed them in the first place), the banks want the business particularly during the handover phase, so that's why there is an inherent 'tilt' in the market to the new rather than the 2nd hand, and the prestigious 'brand' 2nd hand over the 'no name' 2nd hand if you don't buy new.

I can list any number of reasons why this bank strategy is smart or stupid, but it serves no real purpose here; if you want to borrow maximum 80%, buy new or at least buy a brand name property from a reputable developer not a standalone one off house.

With regards to rates, there are usually a few promotions; some are incredibly cheap in the first year, then step up in the 2nd year, some are reasonably cheap in the first 3 years then step up in the 4th year; basically you save money now or you save later; a lot of my friends then reshop the mortgage in year 5 (if they are locked for 5 years) and redo another promotion. This requires the effort to look around and so forth, many don't bother. But it is certainly possible; that's partly why the life insurance helps the bank; note you don't have to buy it if you borrow less, I would guess it is case by case and usually lower than about 60% you might be able to explain why you don't need it.

All the banks are close to eachother in terms of rates generally, but for certain developments there are special promotions particularly during handover. I don't tend to believe that XYZ bank is inherently better than YZR bank; there are good staff, bad staff, good promos, bad promos, and any new development usually the construction financing bank will have a better offer than most others; however some people will not be available.

I've used Bangkok Bank, UOB and Thanachart for mortgages, liked all of them although I found UOB most recently to have the best deals but that's because the agent I dealt with was extremely efficient and offered the best deal immediately without needing to go through protracted negotiation so she could write a load of business for her bank while other banks dithered around. It was so quick I was sceptical, however I think a lot of that was the amount I borrowed was fairly small compared to what I bought (it's a rental property and everything else I owned at the time was already owned outright).

It is totally worth shopping around. However, bear in mind that borrowing is entirely dependent on where and what you are purchasing; a shophouse that you like in the middle of some soi in Thonglor will have a very different borrowing profile than a condo with the same price in a building located right next door built by [insert name of developer that is publically listed and does lame ads for their shoebox condo here].

Edited October 21, 2014 by steveromagnino

[AnotherOneAmerican]

Usually 2% for first year then 7% variable for the rest.

All the banks are much of a muchness.

Unlike other countries, Thai banks like to set a fixed monthly repayment and the length of the loan varies.

They almost all insist you take out their life insurance for approx 5% of the advance, paid out of the advance.

So if you borrow 2M over 25 years, they give you 1.9M + a life insurance for 2M valid 20 years.

You will need 6 months records of wage slips and bank deposits.

That's exactly the deal my girlfriend and her Dad has with K Bank,including having to take out life insurance on her Mum(who's NOT on the mortgage). Was 2% and this month goes up to 7%,not sure about if its daily interest and any early repayment penalties

Yep, this month went up from 2% to 6.85%!

[stament]

Interesting topic

[CWMcMurray]

Agree with earlier posts... Another strategy is to refinance after the early pay off period has ended.

For us that was 3 years...

Also the length of mortgage can be up to 30 years or until borrower will be 60 years old

So for example, if your husband is 40, then max mortgage will be for 20 years... If 30 years old, then 30 years...

To be honest, I like the way they keep payment fixed and time can vary when interest rate changes...

This way of doing this is 'safer' in my opinion, as can avoid the issues that many faced in US... Where after promo rate finished, the monthly payments skyrocketed, causing many to loose their houses...