As one nears to typical retirement age or if one has already retired, financial requirements might change from what might now be known, as those earlier years. A 30-year-old, for example, may require a Mortgage to buy a property simply because they don’t have enough savings required to purchase property in the first place, needing to borrow in order to buy. Often the younger generation is more likely inclined to spend monthly income on experiences and fun weekends, particularly in Pattaya! A 60 Year old on the other hand may already own property without debt and might require a little liquidity in one’s own business or, require cash out of an asset, to invest into other investments which may earn more than the interest on the borrowing, i.e. using other people’s money to make more money. In essence, earlier in life, debts are frequently used to live beyond one’s means, than later in life, debts are often considered a cost to make another investment living only within one’s means.
Typical requirements for both Mortgage applications of a 30-year-old and a 60-year-old would be mostly similar, though with slightly different paperwork requirements, same same, but different as they say here in Thailand!
Let’s take an example of a retiree who has settled in Pattaya & Jomtien with a Thai partner and family, living off a few local properties which are rented out, along with a little pension & investment income from overseas. The requirement is for THB 2,000,000 cash to be deposited onto their local account as they have seen another property being sold relatively cheap since the owner is leaving Pattaya in a rush to move back home, overseas. The retiree knows that for the new purchase, a tenant is ready to rent out the unit for a decent income which may be more than any possible loan installment.
The first thing a lender is likely to consider is the collateral being offered. What is it, condo or house?
Where is it, the exact location?
The building, floor, size, purchase price, valuation, property debts?
Ownership, Foreigner or Thai company and then finally, chanote paperwork and already being transferred!
Assuming the collateral focused lender is happy with the property being offered as security for a loan, the next step is for a loan quotation to be issued. Typically, providing the requested loan is no more than 50% of valuation and the loan meets minimal criteria for it to be worth lenders worthwhile in the first place, a loan may be forthcoming.
When it comes to providing enough paperwork to support a Mortgage application, priorities shift to look at the ability to repay a loan on present income, not possible future income. Within our example above, the following paperwork could be used:
• Rental contracts on existing properties rented out
• Chanotes to show ownership of existing properties
• Pension statements from overseas
• Investment statements to show net worth
• 6-12 month bank statements (local or international) to show where any income flows
Providing income which can be evidenced is more than 3 times any total debt serviced each month, verification is straight forward and relatively easy i.e. The new Mortgage application has a monthly installment quote issued on a THB 2,000,000 loan of THB 24,000 per month over 10 years (up to age 70). Monthly income is preferred therefore, to be at-least THB 72,000, though not essential. On occasions, rental properties don’t have contracts as tenants may have been staying for several years, on these instances, bank account deposit history can be used i.e. if there is a total bank account incoming deposit history of THB 864,000 (72,000 x 12) over the past 12 months, this might be acceptable.
Now it has been determined the property offered as collateral is ok and income is sufficient to warrant any application, other document requirements tend to be straight forward. The only niggle which sometimes occurs is where a 60-year-old has been married overseas before and perhaps hasn’t divorced OR hasn’t fully disclosed all assets to a spouse. For any Mortgage application, if the land office is aware of a Marriage than they will require a spouse consent to borrow and to mortgage OR a divorce certificate OR death certificate. If within the paperwork it is not evident any Marriage has ever occurred, then, of course, the land office doesn’t need this extra paperwork.
Finally, both fire and life insurance policies are usually required by a lender and form part of the lenders set up. Foreigners in Thailand often have life insurance policies overseas however; local Thai lenders require their own policies to ensure local Thai assets are covered under local laws and easily paid out upon, for any claim. Take for instance our working example that has a family and local Thai spouse and borrows THB 2,000,000. In the event of death, the Thai spouse or estate would need to pay off the loan and may not have the means to do so. A local life insurance policy set up by the lender would be relatively straight forward to pay off the Mortgage in event of death assuming, was set up in the first place ok. Providing a copy of the death certificate and a few other details, a cheque is often issued within around a month to the lender, in order to pay off the loan. Of course, it is in the lenders interest to have a local valid policy set up, since nobody will enjoy a role of chasing an estate for debts to a loan, when remaining family members may not have any income or, that has to wait for an overseas life policy or estate to be paid out or, liquidated. Fire insurance policies are often claimed upon for minor details as generally a policy will include more than just fire burning a residence down.
Typically at MBK Guarantee Co., Ltd, we offer Mortgages to both Foreigners and Thai for up to 10-year term or aged 70, whichever comes sooner. Both condominium and landed villa properties are acceptable and if ownership is within a Thai company, it may be required that all Thai shareholders sign a personal guarantor to the loan. Interest rates are from 8.65% on condo purchase cashback (within 1-month ownership), 9.65% for all other condo loans and 12% for every other collateral. Mortgage contracts are typically in dual Thai and English language with direct debit facilities to repay a loan via Bangkok Bank accounts. From start to finish, we usually aim for a loan to fruition within 4-6 weeks from the date of an appraisal fee being paid.
For further information on how to “Finance Property, Land & Condos in Thailand”, or a web-link to the “Thailand Condo Finance Map” which shows pre-approved condominium projects for finance, please feel free to email [email protected] OR, call 66 (0) 81278 5382 OR, Line ID stuartmaxwellfoulkes, I shall then be happy to assist.
To speak with a native Chinese national, contact Rose on 66 (0) 95648 2913 or WeChat: rose215620 or email [email protected]