Published 1st April 2016
Koh Samui is most often referred, as a Hotel & Resort or Luxury Villa based real estate market which of course comes with its more favourable luscious greenery and turquoise sea colour with white sand beaches… Over recent years it has begun to develop a few decent Condominium ventures which perhaps offer a different dynamic to our Thai, Paradise Island.
Aside from a Hotel, Resort and Luxury Villa, a Foreigner is often tempted to part with their hard earned Cash, for a Condo purchase. This is an easier Legal structure to understand in comparison to a Villa. In essence, a Foreigner name is written on the back of the Chanote (Title Deed/Ownership document) which is registered at the relevant districts land office. Even though the writing is of course in Thai, the Foreigners name is translated and inscribed on a legal document as proof of ownership. There is no extra legal structure involved such as a Thai company, which is commonly used for a Villa or Hotel ownership since Foreigners are not able to own Land (in general).
The only catch when making a Condo purchase is that the land office will in most circumstance require paperwork, such as a FET/ Foreign Exchange Transaction Form/ Tor Tor 3, to show money was remitted or exchanged from another currency in order to make the purchase. I.e. a Foreigner is bringing money into Thailand to buy the condo which in theory would than in turn help the Thai economy with cash inflows. Without this paperwork, the land office may not transfer the title into a Foreigner name. For some who live and work in Thailand and earning in THB currency, often is the case where transfers are made out of and then back in, to Thailand, just to acquire this paperwork.
Once the Condominium has been transferred and things are going according to plan with life, a Foreigner may wish to use this Condo as collateral in order to obtain a Mortgage. Perhaps to provide a Cash Injection into their business or, make a further investment in Property or, even splash out on a Luxury Yacht etc.... The choices are endless. This may sound straight forward enough as after all, if you have demonstrated the ability to purchase a Condo with cash in the first place, it surely must be easy to obtain a Mortgage and service the loan with monthly installments…. A Thai Bank would surely jump at the chance…
The Bank of Thailand (BOT) restricts lending to Foreigners therefore, it may be found difficult to obtain finance. In addition to this, if you do actually find some finance, it may also be restricted to just 1-3 properties as any more, is usually again restricted by the BOT, even for Thai people too. This is where a reputable finance company and not a Bank can come into play. There is no major restriction and simply a pot of money to lend for the right collateral.
There are well versed and managed financial institutions in Thailand, which offer flexible Mortgage refinance on Condo’s around the Kingdom, a niche market which helps fill the void left by Thai Banks. Whether a Condo for that weekend in Bangkok to get away from Samui’s Island life OR, perhaps a Condo for the Family in another Province, finance can and is, made available on a daily basis! The good thing about a Condo is that when you have seen one unit in a building and understand construction specifications along with understanding the building strengths and weaknesses in comparison to other Condo buildings, a guesstimate could be made that all other units in the building offer a similar standard of risk and liquidity to a lender thus, making it easy to approve a collateral to make a loan against it. i.e. A newly finished condo near Choeng Mon Beach on Samui is almost guaranteed that each unit in the building will be similar with its specifications therefore, if a lender will lend on 1 unit, they will most likely lend on all units in the building at a similar level, it’s just a case of pre-approval. The building is given an “approved list” status and all units in a building are given easy finance status.
The good news with a finance company (as opposed to a bank) is that work permits, residence, Thai income and Thai wives (all common requests) are usually of irrelevance since a Mortgage could be granted using the Condo title as collateral, rather than the borrower’s ability to repay the loan or Thai connection. That being said, a lender would of course still wish to see regular income or an ability to repay the loan since a lender is after all, a lender interested to make “interest income” rather than interested to collect a property portfolio of bad debts.
The magic question is how quick the finance can be granted?? ..Nothing is ever simple, quick, and easy along with user friendly… Is it?...
A most recent example is where a Hong Kong Investor, who bought a unit in Bangkok several years back, has decided they would like to free up some Cash from “The River” Condo based at the Chao Phraya River in the big City of Angels. On a Monday afternoon, while the Hong Kong investor was overseas, they made contact with a lender in Bangkok to confirm what paperwork is needed. The case was pretty straight forward as ticked all the “easy to approve” boxes (though of course, not all are easy). A single person, salaried employee of a sizeable company, decent income & no bad credit record! Our investor submitted the following while overseas via email and then by courier:
Loan Application Form
Business Card
Passport
12 Month Bank Statements (where income deposited)
Letter from Employer to confirm Income, Position and Start Date
Credit Report
Condo Title Deed
Condo Purchase Agreement (from several years ago)
Condo Common Fee Receipt (to show bills paid and up to date)
Valuation Fee (for this case THB 7,490 on a 108 Sq.m. unit)
A loan size of, no more than 50% of valuation with terms and conditions of 8.9% interest were all agreed on the phone that Monday afternoon, along with a timescale of 3 weeks start to finish & before a meeting in person took place between the lender and investor. Later that same week by Friday, a valuation report was in the lenders hand along with all supporting documents sent by courier from Hong Kong. After the weekend, Monday, the loan was submitted for approval & by Friday, the loan was approved. After another weekend by Monday afternoon, a loan agreement was signed after the investor flew in from Hong Kong and a Mortgage date booked for later that week, Friday. Less than 3 weeks from the initial telephone contact, a cashiers cheque is deposited onto the clients Thai bank account for up to 50% of the condo’s value and the client wasn’t even in Thailand!! The client had proxy the lender to carry out the Mortgage at the land office on their behalf. In total, the client was in Thailand for a weekend on holiday and then just one Monday to sign a loan agreement. The whole approval process and Mortgage registration was carried out without the client even being in Thailand. By now, the client has already spent the Cash deposit and happily servicing a monthly loan installment via direct debit.
Whilst this is a simple case and is easy when the client understands finance terms, is able to commit to providing correct/ readable paperwork in a timely manner and most importantly, the lender has been, seen and lent on the condo building before, a quick loan process could almost be expected and I would certainly be disappointed to expect anything less.
In summary, whether you are a resident on our beautiful island of Koh Samui OR live elsewhere in Thailand OR overseas, when you own a Condo in Thailand and would like some cash back out of the property investment, a lender could provide up to 50% (some cases 60%) of its value pretty easily, if along with the property you, tick the right boxes and all, within a short timescale. A minimum loan size of THB 1,000,000 may be required.
For further information on how to "Mortgage a Thai Condo in as little as 3 weeks", please feel free to email enquiry@globalmortgagefinance.com OR call 66 (0) 81278 5382 and either shall be happy to assist.
Global Mortgage Finance
(Thailand Property and Land Finance Specialists)