Getting a Mortgage on a Property in Thailand

Kariuki Maina
By Kariuki Maina 16 Min Read

Property purchases in Thailand are typically more challenging than those made locally. Numerous dangers will need to be taken into account, and you may need to figure out how to obtain a mortgage for a home in Thailand.

The good news is that we receive a lot of questions regarding mortgages from abroad, and the even better news is that the brokers we work with are well-equipped to respond to these questions.

How do mortgages in Thailand work?

There is one limitation that applies to all foreigners: they are only permitted to hold 49% of Thai real estate (a percentage based on the building and the land it occupies). The property’s deed must be given to your spouse rather than remain in your name, even if you are married to a Thai.

The reason for this is that the Thai government forbids foreigners from claiming even a small portion of its territory. In every instance, 51% of the property (i.e., the building and its land collectively) purchased by foreigners is owned by Thais. Apartments and condominiums are a small exception, as we’ll discover later.

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What types of Thailand real estate mortgages are there?

Seven distinct forms of property titles are available to Thais. The Chanote title (number 4) with its full ownership rights is the safest and is out of the reach of foreigners.

The Condominium Title Deed, which is comparable to the Chanote title in that it grants you 100% ownership of a building but not the land it stands on, is the greatest option available to foreigners.

How do you get mortgages for expats in Thailand?

Due of the difficulty in acquiring land in Thailand, expats have two choices:

  • Either sign a 30-year lease that has the option of three renewals, or
  • Create a Thai Limited Purchasing Company for the purpose of purchasing real estate. 51% of that business must be owned by Thai citizens.

How to get a mortgage in Thailand

There are options available, including…

A 30-year lease

The majority of foreigners who lease land in Thailand for 30 years do so via a Thai national, typically their spouse. This indicates that the foreigner only leases the property; the Thai owns it.

The Thai declares the foreigner as the loan’s guarantor, which implies you are solely responsible for the debt.

You should receive the Chanote title (no. 4) with the red eagle insignia, which gives you complete ownership rights and the freedom to manage the loan anyway you see fit. Ensure that the lease has a clause stating that you want the contract to be renewed once it ends. Up to three 30-year extensions to the lease are possible.

To ensure that the lease offers you (via a proxy) safe ownership, seek legal counsel. Call us for assistance so we can connect you with one of our knowledgeable international brokers.

Purchase an apartment through a self-funded Thai Purchasing Company

Create a Thai Limited Purchasing Company on your own to purchase real estate. Then proceed to purchase the property through that company.

You must possess less than half of the shares in your firm, which must be 51% Thai-owned. By convincing these Thai investors to transfer their shares to them, some foreigners have discovered a workaround for this issue. In this situation, the Thai Ministry of Interior will examine your company.

It’s essential to obtain current legal counsel if you choose this course of action.

Buying a villa or house in Thailand

Houses, villas, townhouses, and detached residences are all referred to be “land” in Thailand, meaning they are all tied to the ground beneath them and may only be bought through a Thai’s proxy. In its literal meaning, property is treated under the same laws as land.

In other words, even if you own 49 percent of the property, the Thais actually own the majority of the land.

Marriage or the creation of a Thai Limited Purchasing firm, as explained in the section above, are two ways to acquire homes of this type.

Note that if you marry a Thai person and buy a home together, the property will return to your spouse if you get divorced.

Buying an apartment or condominium in Thailand

The real estate that is most accessible to foreigners and where you may genuinely have 100% ownership rights are condominiums or flats. This is so because the device is all you possess. The land on which the apartments are built belongs to the Thai. The outcomes are consistent, then: Thailand keeps 51% of the land; you own 49% of the apartment.

You will obtain the Condominium Title Deed after purchasing a condominium or unit. The condo or apartment is marked with the green eagle and includes a Tabien Baan, or registration book, that states you are free to rent or sell the property as you see fit.

Can I get a Bangkok property mortgage on an apartment?

Yes, perhaps. The majority of foreigners choose to purchase their homes in Bangkok and Phuket, where the purchasing process is simpler than in other parts of Thailand. Ensure that you get legal counsel and that the unit is in good shape at the same time.

Getting a mortgage in Thailand for foreigners

Few banks in Thailand will grant mortgages to foreigners.

This is due to:

  • For you to be eligible for a loan, your marriage to a Thai must be fully documented.
  • Or you must spend at least a year working in Thailand.
  • or remain a permanent resident of Thailand.
  • You must be at least 20 years old in order to apply in all circumstances.

If you are successful in getting that mortgage, the majority of Thai banks would normally lend you between 40 and 80 percent of the property’s asking price for a period of 10 years.

Thailand’s mortgages have far higher interest rates than typical (about 6-8%), and the application process is much more demanding and intensive.

What documents are needed for a mortgage in Thailand?

You must present the following papers to the lender in order to obtain a mortgage in Thailand:

About yourself

  • Your passport,
  • Depending on your status, either the Alien Registration Book or the Permanent Residence Book
  • Income documentation and an official letter from your employer (some lenders request a copy of your professional license, too)
  • A 3-month backlog of bank statements, tax records, and the most recent paystubs
  • Visa applications
  • Some lenders ask for birth certificates and name changes (if applicable), while others could need things like employment references, information on prior bank accounts, and marriage, death, or divorce records for the spouse.

For business owners –

  • latest financial accounts and/or tax returns from the previous year
  • Records of VAT
  • evidence of company registration (usually certificate)
  • Over the last six months, net working capital

When it comes to the property, lenders typically request the following:

  • The Sale and Purchase Agreement
  • Proof of Foreign Quota Availability
  • A copy of the Title Deed to the condo or apartment
  • Housing registration record

Lenders often want proof that your income is at least three times what is needed to pay back the loan. Of course, your credit history is also considered.

Getting an international loan for a mortgage in Thailand

Actually, obtaining the loan internationally may be simpler, quicker, and more affordable for you. In fact, the majority of expatriates do so, especially if their source of income is outside of Thailand.

How do I get the best mortgage rates on a Thailand property?

Make sure you use this route and chat with a foreign mortgage broker first!

In comparison to Thailand, borrowing rates are perhaps more favorable in Britain.

The Thai government expects you to pay with foreign money once more since the property will either be leased or, in the case of a condo or flat, signed over to you as a foreigner.

Therefore, your best option is to contact a lender in your home nation and ask for money to send back to Thailand. International banks often offer 30-year loans for up to 70% of the value of the residence.

What else do I need to know if I’m getting a mortgage for a property in Thailand?

The lender is required to notify you if the exchange rate changes by more than 20% if you are paying back debt in Singapore Dollars (SGD).

Your ability to fulfill your future mortgage obligations may be impacted by these changes in Thai mortgage rates.

Lenders must provide you the choice to pay back the mortgage in another currency in order to safeguard borrowers.

What property fees will I pay in Thailand?

The least expensive part of the property is its principal expense.

You, as the buyer, will also be responsible for the following fees:

  • Transfer registration fee – typically 2% of the cost of the property. It typically divides between the seller and the buyer.
  • Business tax (Capital gains tax) – That amounts to 3.3% of the property’s assessed value, which is its greatest worth.
  • Real estate agent fees – A structure like this exists in some areas. Most tourists choose locations with free real estate brokers, like Bangkok and Phuket. (In these locations, landlords give agents a commission.)
  • Legal fees – A negotiable THB 20,000 -THB 30,000.
    Withholding tax – Depending on how long you own the property, this charge rises.
  • Rental cost – There are two kinds:
    • (a) The House & Land Tax, which deducts 12.5% of your rental revenue each year;
    • (b) An yearly deduction that ranges from 10 to 37 percent of your rental revenue.
  • If you buy property through a company, the business costs might be 33% of the total price. If you buy condominiums, the Thai government relaxes this fee.

Good news: Most of these fees can be negotiated. Better news: There’s no annual property tax.

How do you go about getting insurance for your property in Thailand?

The majority of international brokers advise getting house insurance. Thai house insurers advise the following for condominiums:

  • Coverage for fire – Fire outbreaks occur frequently in Thailand
  • Storms – storms are a regular hazard, too.
  • Water damage – water pipes tend to burst causing serious water damage.

The majority of Thai mortgage specialists will suggest that you also include coverage for earthquakes.

What risks should I be aware of when buying property in Thailand?

  • Tax: Make sure to include in all the taxes you’ll have to pay, both in the UK and the nation where the property is located. Additionally, include an escrow provision in your lease to specify that you are exempt from paying porter tax on the condominium. (In Thailand, the building’s Thai owner is the only party responsible for paying property taxes.)
  • Check the paperwork: Before you sign any type of contract or agreement, make sure you have all the required approvals, licenses, and planning consents. Make sure you get the Chanote title if you choose the lease every 30 years option. Examine the lease thoroughly. Make sure the requirements for the deposit are clear, such as that the vendor would return the money if the property does not match its descriptions. (The vendor will ask for a 10-15% down payment, which is refundable if you or the seller don’t follow through.)
  • Exchange rate changes: The value of your purchase might be significantly impacted by even a modest fluctuation in the exchange rate. This might suddenly make owning a home or making your mortgage payments unaffordable.
  • Due diligence: To ensure that your investment is a good one, inspect the property and speak with other condo owners.
  • Your will: After your demise, the Thai property could not always go to your heirs or beneficiaries. The best approach to do this is to include the Thai property in a duplicate will that is signed in your home country.

Always obtain legal counsel from a professional who is not connected to any other party to the transaction, including:

  • The seller
  • Developer, and
  • The estate agent

Make sure your lawyer is bilingual in English and the country’s language, and that they are knowledgeable with both local property law and how it applies to non-residents.

If you’re using a UK law firm, be sure they specialize in international business transactions and property conveyancing and are registered with the UK Law Society.

Where can I find a Thailand mortgage calculator?

You may find Thai mortgage calculators on the websites of certain foreign lenders and other financial centers, but you should be aware that these tools will only offer you a general indication of how much you can borrow and the rates you will ultimately pay.

This is due to the fact that each lender uses a distinct set of calculations to determine your eligibility for a mortgage, some of which are more complex than others. As a consequence, the findings of different Thailand mortgage calculators may differ from one another.

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By Kariuki Maina Kariuki Maina
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5 months ago

[…] If you’re a British expat looking to buy a home in the USA, you will need to provide the following alongside your mortgage application: […]

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