Bangkok Bank Offers Mortgages to Foreigners

[Gaybutton]

The following appears in the PATTAYA DAILY NEWS

 

Bangkok Bank - First Thai Bank to Offer Mortgages to Foreigners

 

In a welcome breakthrough in Thai mortgage policy, foreigners will now be able to apply for mortgage loans thanks to a precedent set by Bangkok Bank (BBL); a move expected to be followed shortly by other Thai banks, keen to tap the foreign property investor market. Previously, Thai banks were extremely reluctant to grant mortgages to foreigners due to their poor credit risk and the current laws governing Thai property ownership.

 

This move by Bangkok Bank will put Thailand, more on a par with its neighbours in Vietnam and Malaysia, who do offer mortgages to foreigners. Chintan Mahida from the overseas property blog stated: "Thailand is now set to move up the ranks in overseas property, thanks to the Thai mortgage change. This is a positive move by the Bangkok Bank, having access to Thai mortgage finance will undoubtedly generate a surge in demand from buyers."

 

Local developers and real estate agents have also welcomed Bangkok Bank's move, seeing it as a means to restore confidence and kick start the Thai property market once more after its recent downturn, due to current political unrest and renewed fears of another coup. The mortgages are available currently up to a limit of Bt25 million, available in US dollars, Singapore dollars or euros (but not Baht!) via Singapore for a wide range of purchasers and Hong Kong for their citizens only. Previously, private off-shore personal loans or lines of credit, especially in the Isle of Man, were available, but at unattractive rates.

 

The Head of the Thai Desk at the Singapore branch of Bangkok Bank, Yaovaluk Suksathit, said that currently the bank has made 20 loans. The Singapore branch has been more assertive in its approach than Hong Kong, which only extends mortgages on freehold condominiums, as their 49% freehold terms and 30 year leases (in some cases, 90 years in perpetuity) carry less risk than houses, whereas in Singapore, loans will be considered for other types of property, including homes on leased land

 

Prospective purchasers can now borrow up to 70% of the property appraisal value or the purchase price, whichever is lower, dependent on the applicant's earning capacity, over a maximum loan period of 10 years. A buyer interested in purchasing a condominium costing Bt20 million, for instance, should ideally be earning around Bt300,000 per month.

 

However, all that glitters is not gold, as they say. Chintan Mahida, for example strongly advises prospective loanees to do their due diligence. If one was a Hong Kong citizen, for instance, one must pay a processing fee of about Bt125,000 baht on acceptance of the bank's letter of offer. Approximately Bt50,000 baht of this is refunded when the loan is drawn down. In addition, initially, 1.5% of the loan amount must be handed over to the bank as a "prepayment fee."

 

In addition market fluctuations, interest rate increases, rising costs of living and other variable factors must be taken into consideration. In borrowing, a safe rule of thumb is to assume, for example on Bt 1 million, double the sum borrowed, which now amounts to Bt2m, and then halve it again ie 50% of the loan. All told one will have to repay Bt 2.5m over the loan period. Ideally, those in the know advise prospective borrowers not to listen to sales hype from real estate agents as they are only interested in their commission, not in one's your ability to repay one's loan. The best criterion is only to buy if you really need to and have sufficient reserves to cover emergencies and other contingencies and also take into consideration the bogey of negative equity. This, as speculators in the US housing market found to their cost, is an ever present threat, where the market value slumps lower than the resale value of the property, leaving you heavily in debt. Take heed; follow your head, not your heart!

[2lz2p]

Bangkok Bank has had these loans available for some time. There was another article or maybe a thread on another message board (can't remember exactly where I saw it) that also mentioned this. It is my understanding that Bangkok Bank gets around a restriction on making such loans to foreigners by funding the loans from their Singapore (branch) Bank.

 

I first came across this information 2 or 3 years ago and looked into the criteria, which was on Bangkok Bank's web site. The current information is located at Bangkok Bank FAQ for foriegners

 

However, when I looked into it previously, there was an age restriction. It is not shown with the information at the above link, but is shown under the Home Loan FAQ, which shows: Your age, together with the loan tenure, is no more than 60 years if you are an employee, or 65 years if you are self-employed.

 

 

[Gaybutton]

Bangkok Bank has had these loans available for some time.

 

That is true, but you had to go to Singapore to get the mortgage. From this article, I'm getting the impression that now you can get the mortgage within Thailand. The article doesn't make that clear, at least not to me. Does anyone out there know for sure?

[2lz2p]

When getting my bank letter this week for retirement visa renewal, I picked up an English language brochure, entitled, Welcome, A Guide to Bangkok Bank Products & Services. The brochure comments on the ability to get mortgage loans for purchases of USD 300,000 or more. It refers the reader to the following:

 

For more information, please call (66) 0 2626 3846 or visit Bangkok Bank's expatriate banking team on the ground floor of the Head Office branch at 333 Silom Road, where English speaking staff can provide the assistance.

 

The web page (foreigner FAQ) I linked, lists the Head Office and several branches to get information (does not list any Pattaya branches). It also has an email address one can use to send inquiries. No mention in any of these that you have to leave Thailand to get the loan -- I can't say for certain, but I believe the application, etc. can be made and processed in Thailand, but the actual loan is from the Singapore branch - loans are made in Singapore Dollars, US Dollars, or Euros.