Mortgage for Property Purchase in Thailand
In Thailand, there is no bank mortgage available for non-residents. The only financial institution in Thailand that provides loans for foreigners to purchase property is the MBK Group. However, foreigners can still distribute the payment without a loan, as most developers offer installment plans, with some allowing payments to be spread over a period of up to 5 years after the project is completed. Let's take a closer look at the terms for loans and installment options for foreigners.
Loan Rates and Installments
Loan interest rates from MBK are significantly higher than the commissions on installment plans offered by developers. At MBK, you can get a loan to buy an apartment at an annual interest rate of 12%, while developer installment rates in Phuket range from 3% to 7%, depending on the length of the payment period, and without the need for extensive documentation. The choice for customers is clear.
MBK Mortgage
MBK provides loans for purchasing apartments in condominiums on both the primary and secondary markets in Bangkok and tourist resorts, for personal use or investment. Loans for under-construction properties are not available, and loans are issued exclusively in Thai baht.
- Maximum loan amount: 50% of the property's value
- Minimum loan amount: 1 million baht ($29,000)
- Fixed interest rate: ~12% per annum
- Loan term: 1 to 10 years
- Maximum age of borrower at the end of the loan term: 70 years
Required Documents for a Loan in Thailand
Unlike Thai banks, MBK does not require a residence permit, work permit, or proof of marriage to a Thai citizen. Income from abroad can be used as the source of funds. The following documents are needed to obtain a loan from MBK:
For individuals:
- A passport valid for at least 6 months at the time of application, with a valid visa (if applicable) and entry stamp to Thailand.
- Marriage or divorce certificate (if applicable).
- Spousal consent to obtain a loan. In some cases, spouses are required to be co-borrowers.
- Bank statement for the last 6 months.
- Credit history report from the country of origin.
- Proof of foreign address, such as utility bills (for non-residents).
For legal entities:
- An official company affidavit, valid for at least 3 months.
- A list of shareholders (Bor-Or-Jor.5 form).
- Passports of directors, valid for at least six months.
- Financial statements audited by a certified accountant.
- Bank statement for the last 6 months.
- Credit history report for the company and its directors.
- Proof of foreign address, such as utility bills (for non-residents).
Property Documents:
- Title deed.
- Valuation report.
- Deposit receipt.
Documents must be translated into English or Thai. Once submitted, the loan is typically issued within 10 business days.
Additional Expenses When Applying for a Loan
When applying for a loan, the borrower must also cover additional costs, including commissions, fees, appraisals, and insurance.
Key Fees and Charges:
- Loan origination fee: 1.25% of the loan amount (minimum 30,000–40,000 baht)
- Mortgage registration fee: 1% of the loan amount
- Stamp duty: 0.05% of the loan amount
- Prepayment penalty: 2% of the prepayment amount
Additionally, costs for property appraisal (Due Diligence), fire insurance, and borrower’s life insurance are required.
Developer Installment Plans
Installment plans during construction are a common practice not only in Thailand but also in many other countries. Payments are made in proportion to the construction stages, and the installment plan during construction is interest-free. However, developers may offer up to a 10% discount if the full amount is paid upfront.
In some projects, the installment period can be extended up to 5 years after the completion of construction. In this case, 50% of the property cost is paid before the project's completion, while the remaining 50% is spread over the agreed period with an annual surcharge of 3-7% — the shorter the term, the lower the interest rate.
Ownership of the property is transferred only after full payment. However, in some projects, the buyer can start using the property after paying the initial deposit and the construction is completed, even if the full installment has not yet been paid.
Considering the year-round tourist demand in Thailand’s resort areas, where rental returns with guaranteed contracts start at 5% per annum and can exceed 8% with rental pool schemes, installment fees and loan rates don’t seem too high. This is especially true when compared to other countries popular with foreign investors, where returns are lower and loan rates are comparable or higher.