Introduction of Thai Mortgages For Foreign Owners

While on the surface it may only seem like a small change, experts at Nubricks.com predict that buying property in Thailand will become more popular due to the change in Thai mortgage law. The introduction of mortgages to foreigners living in Thailand has the potential to transform the property market overnight.

The move has been made by Bangkok Bank (BBL) and involves foreigners applying for Thai mortgages through the bank’s Thailand branch, with the process being completed in the main Singapore branch of the Group. Even though there are a number of conditions attached to the mortgage service, its launch does bode well for the future of the Thai property sector.

“Though well known as a fantastic but low-cost holiday destination in Asia, Thailand is now set to move up the ranks in overseas property thanks to the Thai mortgage change,” said Chintan Mahida, property expert of Nubricks.com.

Under current Thai laws foreigners are not able to own land directly but they are able to acquire a condominium if more than 49% of the units in the complex are owned by Thai nationals – which in reality means that in a 100 unit site only 49 condominiums can be owned by foreigners. While this law has somewhat held back the Thai property market, its effect on the buying of Thai property has not been as great as the lack of finance available to foreign owners.

Commenting on the introduction of the new Thai Mortgage Service, Miss Mahida, expert writer behind the Overseas Property Blog said “This is a positive move by the Bangkok Bank, having access to Thai mortgage finance will undoubtedly generate a surge in demand from buyers.”

“However, the mortgage market in Thailand is very new and I would encourage potential investors to do their homework.”

While the BBL mortgage service will only apply to properties with a value in excess of US$300,000, the actual amount loaned to the home buyer will be no less than US$200,000 (i.e. around 70% of the purchase price). The customer can request to take a mortgage in one of three currencies which include US dollars, Singapore dollars or Euros, and their choice will affect the rate of interest which is payable on the loan.

There are also fees of up to US$2,000 payable to BBL, $200 on application and $1,800 on completion, although this is not too dissimilar to many Western mortgage arrangements. The maximum term of the mortgage is 20 years, although the age of the customer on application plus 20 years should not be over 65 years. The service has been very much welcomed by expats in the region who had been forced to use their savings or save up before being able to purchase properties in the country.