Global Mortgage Finance
(Thailand Property and Land Finance Specialists)
Published 1st June 2016 - Over 60s Property Finance in Thailand
To live, work or spend a retirement In Thailand is often the goal for many who dream about that “Place in the Sun”. Whether it is the Thai food, the beaches, the turquoise waters, the lifestyle & conservative approach to daily chores or even just that sheer beauty of the country with its extensive network of luxury hotels & inspiring national parks, something may trigger a desire to Relocate to Thailand or more specific, Relocate to our tropical islands of Koh Samui & Koh Phangan. From home creature comforts and into the land of the unknown, Thailand can either turn out to be the most amazing place you may encounter or… on occasions quite the opposite.
Amazing experiences could mean, an encounter through due diligence or, by luck or by chance, contact with the right network for whom to do business with. The option is still available to pick friends and acquaintances from scratch, particularly if upon arrival there is not one person that you know or had dealings with before. Choosing those new contacts wisely will certainly help steer the direction for a successful future life in Thailand.
Having spent several years working with both successful young entrepreneurs of the kingdom, whom may strive for perfection and an increased monthly wealth whilst at the same time enjoying daily life.... to then… more experienced & senior citizens whom may have a wealth of experience not just in Thailand but around the globe, I have come to notice that the elder often simply wish to enjoy their life whilst at the same time remaining in a financial security. The more senior may also no longer have that regular monthly disposable income and often their hard earned cash is locked up within a business, pension or property with minimal monthly and more irregular, income/dividends. It is this type of irregular income or overseas asset wealth, which a Thai bank may struggle to accept as proof of income, should one consider to take out finance on a property.
A recent example to work with had been where a 66 year old had retired from work and no longer drew a salary from the company for which had owned over the past 20 years. In effect for the past 6 years, there was no regular income from employment or pension and had simply property assets around the globe for which to use for personal and extended family use, at different times of the year. Thailand as it happened was the favourite during January - April due to the lower temperatures at that time of year... Whilst the client had retired from employment, as an owner of the company, an annual dividend was still taken which would total around THB 6,000,000 and deposited onto an offshore bank account. When going to approach the banks, at an age of 67 this was the first obstacle. The second, there was no monthly salary or income with the money earned and it came from overseas deposited first in the French Polynesia Islands, a place not even heard of by many staff and paperwork is written in French… illegible for the average Thai language bank employee. Declined.
The prime beachfront pool villa which was a planned retirement home had recently been reduced in price and our client was short by 30% (THB 12,000,000). In order to complete the deal, it was essential that THB 12,000,000 would be available on day 1 to help purchase the property and that there would be no monthly installments, it was preferred for an annual lump sum principal payment allowing to utilise the annual dividend which was paid out thus in turn would reduce the loan principal ultimately paying off the loan. Seems like a good deal for a lender… Pay 30% and secure a property worth much more and if the client disappears, well the lender can sell the property at a profit…. Of course, interest would also still need to be paid.
In order to submit the case for approval, the first thing a collateral based lender may require is the following:
1.Google Map Link – To show where the property can be found
2.Chanote/ Title Deed – To show clear and transparent ownership of the land
3.Recent Photos – To show current condition of the property
The reason to suggest a collateral based lender is that this way, the lender at first is not so interested in the client ability to repay the loan and more interested in the liquidity of the collateral. To consider a worse case scenario of the client having an inability to repay the loan, if the lender is stuck with a well conditioned and decent location property, it is far easier to shift again than perhaps a substandard and poor location home, which few would actually buy. First try to hook the lender with the above 3 items and than if acceptable, can follow up with the personal details and bank statements etc. as after all, If the collateral is of no interest to the lender, than usually it makes no difference how well the client can pay the loan thus in turn will save important time for both the client and lender.
Once the collateral based lender is happy with the property, the next thing to consider is the paperwork. Most financial institutions in Thailand will accept either Thai or English translation documents. If Chinese, Russian, Arabic or French etc. than some of paperwork is likely to be require for translation. It is worth to clarify which document as rather than pay a third party for 12 months of bank statements to be translated, perhaps just the first page with the headers could be sufficed as the rest, of which has any importance on a statement, is usually just numbers. The next thing to consider is the ability to repay. Of course the lender may only be lending 30% on this example but ultimately, they are likely to not want a property portfolio, they would most likely prefer to make profit on interest income rather than building a portfolio of property, which is likely to take much more maintenance and cost to uphold the collateral ready for a premium sale. A paper trail within the loan pack to show evidence of ownership within a company or current assets, are good to show as credibility to the lender. If an annual dividend is paid, than the certificate and bank statement entry to show payment is also of significance since confirms an income, albeit that maybe irregular. If income is irregular than a traditional monthly capital plus interest loan is likely to be inconvenient or even unaffordable. If made clear within the pack at the start income was annual, than could be better to set up similar to an interest only Mortgage, with payments collected annually & upfront, rather than monthly.
While we could go much more in depth here and fill this magazine issue, in summary, an Over 60’s application is worth to consider there is likely a higher probability of different solutions to approve the finance package. A straightforward Mortgage or Kai Faak is the standard, though understanding a client’s need may point to another direction and happens more often than not, for the Over 60’s market segment. Another couple items not discussed here yet is for 1, a Will! A legal adviser may suggest that a Thailand based Will is registered to ensure the asset is handed over to an estate correctly as if the property was accounted for in an overseas Will, it may not be recognised by the court of Thailand, thus pointless and ultimate ownership could be lost from the true and intended recipient. The second item is Life Insurance. Could the executor of an estate maintain loan costs from day 1 upon death or, will the account go into default incurring legal process and procedures which in turn increases costs and possible loss of the property to the estate. A simple life policy registered in Thailand accepted by a lender, which upon submission of the death certificate pay’s out, will ensure the property goes into an estate without any encumbrances and legal headache for the executor. Finance is available; it just needs careful attending too during the life of loan by a reputable lender.
For further information on how to "Finance Property & Condos in Thailand", please feel free to email enquiry@globalmortgagefinance.com OR call 66 (0) 81278 5382 and either shall be happy to assist.