Creative Finance Options For Investors Looking To Buy Thai Property
Contribution from freelance writer Jennifer Alley
The Thai economy is forecast to grow, according to the International Monetary Fund. Record numbers of work permit applications show that Thailand is more popular than ever amongst expats wishing to settle down, and tropical cities on the coast are in favor. As Thailand becomes more known as a great destination to settle down, would-be expats are looking away from the hustle and bustle of cities such as Pattaya, and are instead looking to Hua Hin.
Economic conditions are now favourable for investors, as incoming foreign money can provide stimulus to the local economy. However, Thailand’s main lenders are clamping down, with stricter regulations and higher interest rates, as reported by Bloomberg. While this is positive news, as higher rates and tighter controls are typically a good macro-economic indicator, it means that purchasers must look for new and alternative ways of financing property purchases.
Conventional Finance From Thai Banks
Whilst it’s more difficult than it used to be, conventional finance can still be obtained in some cases. Often, some of the major lenders will consider an application, if the borrower meets the following criteria, which is quite similar to the processes in most western countries.
A work permit of 12 months or longer.
Repayments must not exceed 1/3rd of the applicants salary payments.
Foreign credit checks apply.
A stable, fixed income.
Some banks require that the applicants age + the loan term, can not exceed 60 years.
This is only helpful, to investors that are already resident in Thailand. Some of the following methods may better serve overseas investors.
International Lending Options
Certain banks such as Bangkok Bank’s Singapore branch, tailor loans to specifically meet the needs of overseas investors. While some requirements, such as the need to visit the branch in-person may seem particularly onerous, it can be worth investigating, depending on the applicant’s personal circumstances.
Line Of Credit In Home Country
Quite likely for many prospective purchasers of investment properties in Thailand, is that they will have assets in their home countries already. Most western countries, such as the UK, US or Australia, will offer multiple options that come under the umbrella of “refinancing”. Depending on the individual’s circumstances, the bank may only want to lend in the form of a mortgage on an additional dwelling. Many people however, will have enough equity where they are able to get a line of credit against one of their houses that can be spent however they choose. Some may even provide it in the form of an offset account, where the user is not paying interest until the money has been withdrawn for the purchase.
Many options are available for purchasers looking into buying their first Thai investment property or expanding their portfolio, and investors would be wise to consider all the possibilities before settling on a particular route.