Getting a Mortgage in name of my son

[bprhodes]

My situation:

I am 60, with retirement visa, living in Chiang Mai

I have Thai son (I am divorced from his mom), 22 years old, lives in USA, works but with low income.

My son's Thai uncle is a wealthy businessman in Isaan.

I would like to buy land in my son's name, and obtain a construction loan to build a house. I would then obtain usufruct from son. Rich uncle is willing to be co-signer. I of course will pay the mortgage. I have ample verifiable income from pension for loan up to 4-5 million baht over 10-15 years (less for shorter term). I can afford to buy the land with cash up to ~1 million baht, and 1-1.5 M baht for down payment on construction if necessary.

So loan would have 3 co-borrowers (my Thai son, his Thai Uncle, and me).

Does anyone have specific experience constructing such a deal? Which Bank(s) might be most receptive to such a loan? Are there high-quality builders in CM who would finance the construction?

Spare the "never buy property in Thailand" replies. I am fully aware of what I am getting into!

[Paul944]

One of the requirements to get a mortgage is to live in Thailand. I wonder if an usufruct construction is allowed on mortgaged property because it will impossible for the bank to resell if the payments stop.

If the uncle is rich borrow his money to buy the property in your sons name.

[Crossy]

As noted above, the usufruct isn't going to happen until the loan is paid off.

As for the construction loan. I know of one mate who did something similar although all the parties (2 Thai and 1 Brit) were in Thailand and working here, it's worth talking to SCB (the purple bank), take the rich uncle along too.

They used the land they were building on as security for the loan, then the lot was converted into a mortgage once the house was finished.

Many things are possible, but if you don't ask you won't know.

[blackcab]

As noted above, the usufruct isn't going to happen until the loan is paid off.

That.

[osandpo]

Your loan application has a few special features compared with the normal ones seen by banks here. They need to satisfy the Bank of Thailand auditors (and their internal auditors) too so will need to keep it as "normal" as possible. Or at least be able to justify the exceptions. Even the "soft" options like the government banks and the purple bank are stricter these days due to higher problem loans.

1. Your son is overseas. I'm guessing he has no local income and only a very basic local banking relationship. Is he by any chance working for a Thai government body there or for a big company like Thai Bev or CP etc? If so, then Krung Thai may help if he is a government servant, while for big Thai corporations' staff it's useful to try the employer's main local bankers.

Regardless of the employer, it'll often be necessary to tell the bank that he is planning to return home soon to live in the house. (His status will be important as he is the borrower whose age justifies your 10-15 year loan repayment tenor)

2. It's a home construction loan. Not all banks do this as the follow up process is difficult. TMB, SCB Thai and the other partly/fully owned foreign banks are not likely to be helpful.

Best thing is to go to the bank where your son's Uncle has his main relationships. If he's a valued customer they will make this more possible

3. The 30 year lease/usufruct construct - very, very unlikely to be agreed unless the Uncle is a private banking level customer (the very wealthiest customers) with the bank you go to. Then it could be treated as an investment type mortgage. From what I've seen Thai banks do not typically charge higher rates for investment / rental mortgages

4. As a foreigner your being a co-borrower may actually complicate the loan approval process. Bank auditors get data files on consumer portfolios and selectively review a sample of files. Overseas borrower addresses (your son) and non-Thai borrowers are obvious sampling criteria they might use. It's not clearly illegal for banks to lend mortgages to non-Thai borrowers but it's not exactly encouraged by Bank of Thailand either. Subject to what the bank says, you might consider being a guarantor instead, especially if your name is not going to be on the the land or the building (the Uncle may prefer to be a guarantor as well as there are greater legal protections that way). However, the increased protections for guarantors introduced in the last 2 years may have caused banks to insist on co-borrower status instead - see what they say.

All in all, my recommendation is to go for the bank that knows the uncle best, convince them that the son's US employment is not long term and he will/intends to return in X years to work for XYZ (if that can be done without giving an impression he will be jobless when he comes back), have a formal lease from your son but not a registered long term lease/usufruct. Yes, that means that your position is weaker if there's a family dispute etc but the only alternative is if the uncle can get the bank to see it as an investment with the long term lease as a key aspect of his investment.

This all sounds a bit devious but the lower the level of approval authority you can get in the bank typically the quicker and simpler your application process

[lostmebike]

As noted above, the usufruct isn't going to happen until the loan is paid off.

That.

Great contribution there.

[RAZZELL]

One of the requirements to get a mortgage is to live in Thailand. I wonder if an usufruct construction is allowed on mortgaged property because it will impossible for the bank to resell if the payments stop.

If the uncle is rich borrow his money to buy the property in your sons name.

Not strictly true.

My wife has one based on her UK earnings - but her sister is also on the loan.

RAZZ