Thailand Property Mortgage and Financing Options for Foreigners

June 1, 2022

In the past decade, Thailand’s vigorous economy and amazing environment have catapulted it into its status as a dominant investment hub in Southeast Asia. In recent years, cities like Bangkok, Phuket, and Pattaya have welcomed a steady rush of foreigners who are interested in buying their properties.

The big question now is… Can a foreigner actually purchase a property in Thailand?

The short answer is YES. However, there are a number of important things that you need to know.

First, Thailand has progressive foreign property ownership laws, yet only a handful of Thai banks and lending institutions currently offer mortgage options to foreign buyers. Mortgages (also called property loan facilities) are common in Thailand — like most other countries — but it was only in the mid-2000s when foreign nationals finally gained access to bank funding. That was when the country started becoming a popular site for international property investments (with the earliest mortgage providers being Bangkok Bank and UOB).

While there are now a larger number of options for financing and mortgage loans that are offered to foreigners in Thailand, they all come with a list of requirements and restrictions.

Property Mortgage and Financing Options

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Foreigners in Thailand who wish to have a property to their name can have it in several ways. But first, let’s talk about mortgages.

A mortgage is an agreement in which a financial or lending institution (referred to as the mortgagor; which is usually a bank) lends a specific amount of money at interest to a person or group of people (referred to as the mortgagee) for the purchase of a property. The mortgagor holds the title deed of that property until the mortgagee fully repays the total loan (including interest).

The property that was financed is treated as the collateral of the mortgage. In the unfortunate scenario that the mortgagee is unable to completely repay the loan, the mortgagor will get to keep the purchased property.

Mortgage payment is usually expected on a monthly basis for several years. Once the mortgage loan is fully paid off, the mortgagee will finally be able to hold the title and own the property outright.

Essential Information for Foreigners

So... what do foreigners need to know before applying for a mortgage loan or other financing options in Thailand?

Here are the basics:

• There are a few mortgage loan options available for foreign buyers

• There are a number of requirements that you’ll need to meet to get a loan

• Mortgage or financing terms and conditions for foreigners are often less desirable compared to local buyers, because...

• Banks and other financial institutions try to manage risk by charging higher interest rates and loan-to-value (LTV) percentages to foreigners compared to locals, and...

• The repayment period is often shorter compared to loans given to Thai buyers

You may find more detailed information about mortgage criteria and protection in The Thai Civil and Commercial Code – Section 702.

You may qualify for protection under Thai Law as long as your mortgage meets the following criteria:

• The property’s right of ownership must lie with the mortgagor.

• The mortgage contract must be in writing and registered.

• Individuals must register the mortgage for land with a title deed at the Department of Lands, Bangkok Metropolis Land Office (Branch), Provincial Land Office, or Provincial Land Office (Branch) where the land being mortgaged is located.

• Individuals must register the mortgage for land with no title deed (e.g., a Nor Sor 3) at the District Office where the land being mortgaged is located.

There are two very important factors to consider before applying for a mortgage or financing option in Thailand: your age and the terms.

Age. Thai banks do not offer mortgage loans to people who are above the age of 60, and their rationale is that senior citizens will not have enough income to repay a large loan. This is because, unlike other countries, social security payments in Thailand are quite low and are usually not enough to repay a mortgage. Therefore, mortgages need to be fully paid before the mortgagee’s 60th birthday.

Hence, although mortgages are commonly available in periods of 10, 20, and 30 years, the person’s age must be considered in determining the repayment period: people applying for a loan in their 20s or 30s can choose any repayment period. For those aged 40 and above, the only options are mortgages with a repayment period of 10 to 20 years. For those aged 50 and above, only the 10-year repayment option will be offered.

Terms and Conditions. Besides the repayment period, you also need to look into other terms and conditions before applying for a mortgage. Ask yourself how much down payment you can give and what percentage you absolutely need to finance.

Keep in mind that the majority of Thai mortgage companies will expect you to give a down payment of around 30-40%, and that you’ll borrow 60-70% of the property’s value.

However, in case you’re not qualified to get a mortgage, you still have other options: You can have a lease with the option-to-buy with the current owner of the property and a lawyer. In addition, a lot of developers now offer direct financing to prospective unit buyers (the exact terms and conditions vary depending on the developer).

Requirements for Foreign Nationals

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If you’re qualified and you decide to push through with your application for a mortgage, bear in mind that banks in Thailand implement different policies for extending a loan to foreigners.

Here’s a list of things that a mortgagee needs to meet or have:

• At least a one-year work permit or a Thai resident permit

• Proof of employment in Thailand and annual salary (including pay slips)

• In some cases, copies of your employer’s company documents (these are to verify the sustainability of your employment)

• Pass a credit check conducted by the bank

• Current age combined with the loan period must not exceed 60 years

• Have a stable and secure job

• Receive a total income that’s at least three times higher than each installment

• The aggregate amortization of the loan must exceed seven years (for some banks)

Here are the main requirements that a loan applicant must submit to the bank:

• Copies of passport including the visa page, identification card, or government official identification card

• Marriage certificate of the applicant and spouse (if applicable)

• Confirmation of income or salary, and copies of bank statements

• Copies of land or unit title deeds, as well as sale and purchase contracts

Properties That Foreigners Can Buy

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Now that you know the essentials and basic requirements of mortgage loans and financing options, you need to be aware of what properties you can use those for.

The 1979 Thailand Condominium Act allowed foreign nationals to legally own a condo (or several condos) in the country. However, there’s a limitation: A foreigner may not own more than 49% of the units in any one condominium building.

Here are 3 important rules that foreigners hoping to buy a property in Thailand need to know:

1. Foreigners cannot own land

   Foreign nationals may not own a house in Thailand since they are technically not allowed to own land in the country. Coincidentally, most houses are located outside the city, and the majority of lenders don’t want to extend a loan for properties upcountry.

2. They may own and control buildings and structures located on a plot of land.

3. They may own and control Condominium Freehold Titles (simply called “condos”).

With these in mind, the easiest way for foreigners to buy a property in Thailand and have their name registered on the title deed (called “Chanote” in Thai) is to buy a condo.

There’s a good reason behind Thailand’s strict foreign property ownership regulations. They are designed to protect the country’s economic and social development. Since real estate properties in the country (even those that are located in its capital, Bangkok) are extremely affordable to many buyers from other countries, there’s a risk that the influx of foreign investors could inflate the prices of its properties.

Such a thing has happened in megacities like New York, London, and Hong Kong — where real estate prices have skyrocketed due to international buyers. Hence, Thailand’s strict real estate regulations are meant to ensure that locals are not displaced and “priced out” of their housing.

Mortgage and Finance Options for Foreigners

The country where a person is residing is not a condition of eligibility for getting a mortgage loan in Thailand: you can get funding whether you’re residing in Thailand or not.

So, what property financing and mortgage loans in Thailand are available to foreign nationals? There are a variety of options:

Mortgage Providers for Foreigners Who Earn Income in Thailand

Keep in mind that the list below is not exhaustive and that lending institutions regularly update their policies. It’s best to contact each of these institutions directly for the latest information about their mortgage loans and financing offers.

1) Union of Overseas Banks (UOB)

UOB is a Singaporean bank that has several branches in Bangkok. It offers loans to investors who live in Thailand or overseas, exclusively for the purchase of condominium units. UOB is regarded as a reliable and professional financial institution.

UOB was one of the original entrants in the foreigner mortgage market, and this mortgage service was set up to cater to the growing demand of Singaporeans who wish to buy properties in Thailand.

UOB typically gives priority to buyers from Singapore and Malaysia. The funds will come from Singapore, but foreigners can apply for a mortgage directly at any of their Thai branches.

The general mortgage terms and conditions of UOB are as follows:

• Available for properties in Bangkok and select upcountry locations

• Granted for either investment or residential property purposes

• The principal amount is up to 70% of the purchase price

• The currency of the loan will be either Singapore Dollars (SGD) or American Dollars (USD)

• The mortgage term is up to 30 years

Here are the main terms and conditions of UOB mortgages for non-Thai condominium buyers:

• Loan-to-value (ratio amount lent by the bank or valuation of the condo by the bank, based on the bank’s estimated value of the property) of 40 to 80%

• Floating interest rate of 6.5-8% (based on history from 2007 to 2017), depending on a fixed rate plus a floating rate indexed on foreign currency

• Progressive amortization of loan (constant monthly payments of capital and interest)

• Tenor of up to 10 years

For more information about UOB’s mortgage loan or other financing options, you may visit their International Property Loans page.

2) Bangkok Bank

From 2005 to 2016, Bangkok Bank — one of the leading financial institutions in Thailand — offered mortgages to foreigners for the purchase of condominium units in the country, regardless of which country they were residing in at that time. The process, requirements, and terms were quite similar to UOB’s, but the main difference is that borrowers needed to fly to Singapore to apply for the mortgage.

This mortgage offering for foreigners was discontinued in 2016, but it’s worth keeping an eye out for it in case it’s offered again soon.

Mortgage Providers for Foreigners Who Don’t Earn Income in Thailand

1) UOB

Foreigners who receive stable income outside Thailand can get a mortgage loan that’s exclusive for the purchase of condominium units from UOB. This is quite popular among foreign buyers from Singapore, Hong Kong, and Kuala Lumpur — who form a growing portion of condominium buyers in Bangkok, Phuket, and Koh Samui.

2) Industrial and Commercial Bank of China (ICBC)

Quite new to the market is ICBC, which started offering mortgage products in response to the increasing demand for Thai properties from buyers in China, Hong Kong, and Macau. Unsurprisingly, it prioritizes the loan applications of people from mainland China and its special administrative regions.

ICBC is a state-owned multinational Chinese banking company, and they offer The Foreigner Housing Unfunded Financing for buyers of properties in major Thai cities like Bangkok, Phuket, and Pattaya.

This financing option is open to non-resident applicants between the ages of 21 to 55, who have a stable income stream and good credit. Like other loans, the sum of the applicant’s age plus the tenor should not exceed 60 years.

Chinese-mainland citizens must have a work permit in overseas countries, while there’s no required work permit for citizens of Hong Kong, Macau, Singapore, Malaysia, Taiwan, etc. Prepayment is allowed, with a penalty depending on the outstanding principal balance: 3% for the first 3 years and 1.5% after the first 3 years.

Here are the main terms and conditions of ICBC’s mortgage offering:

• Available for completed condominiums with a value of more than THB 2.5 million and located in main Thai cities and provinces (e.g., Bangkok, Phuket, Pattaya)

• Granted for either investment or residential property purposes

• The principal amount is up to 70% of the purchase price

• The currency of the loan will be in Singapore Dollars (SGD)

• Loan amount starts from THB 1.5 to 15 million: if the value is between THB 1.5-7.5 million, you can get a maximum of 70% of the purchase price or appraisal price (whichever is lower); if the value is at least 7.5 million baht, you can get a maximum of 60% of the purchase price or appraisal price (whichever is lower)

• Fee Rate: 5.25% for 1st year, 5.75% for 2nd year, and 1 Y SIBOR+6.0% for 3rd year and onwards

• The mortgage term is 3-15 years

For more information about ICBC’s mortgage loan or other financing options, you may visit their Foreigner Housing Unfunded Financing page.

3) MBK Guarantee

For foreigners residing in Thailand who are not eligible for regular mortgages offered by UOB because they don’t have a work permit nor a stable source of income in the country, MBK Guarantee is the only choice — which relies on their Thai property as collateral.

MBK Guarantee is a mortgage service that’s made possible by the operators of Bangkok’s famous MBK Shopping Mall (the MBK Group). The lending institution was launched in 2008 and is considered a trusted local provider of financing for foreigners.

This lending institution has been providing “foreigner-friendly mortgage finance options” since 2014. They give a loan-to-value of up to 50% and a tenor of up to 10 years, and that’s good for any freehold condominium purchase. However, take note that their interest rates are slightly higher (up to 10% more) than UOB’s due to the lender’s risk.

They offer extremely flexible eligibility terms: neither Thai Work Permit nor Permanent Residence is required. Compared to UOB and ICBC, they are also more open to different mortgagees' nationalities. Again, however, perhaps partly due to this flexibility, they charge higher interest repayment rates and give shorter loan terms.

Here are the main terms and conditions of MBK Guarantee’s mortgage offering:

• Available for Bangkok and key resort provinces (e.g., Pattaya, Phuket)

• Granted either for investment or residential property purposes

• Mortgage loans for either condo projects or landed property (e.g., villas)

• The principal amount is up to 50% of independent valuation

• The currency of the loan will be in Thai Baht

• The mortgage term is 1-10 years

For more information about MBK Guarantee’s mortgage loan or other financing options, you may visit their Condo Loans and Kai Faak Loans page.

Other Mortgage Loan Providers for Foreigners

1) Western banks

In recent years, huge western banks have entered the Thai condominium loan market. These banks lend only to buyers from their own country, and the mortgage is not on the property bought in Thailand but on the buyer’s assets in the country of origin (this is referred to as “collateral mortgage”).

The nice thing about this option is that they require fewer and less stringent requirements compared to loans from UOB and MBK Guarantee. The terms are also more attractive compared to those two.

2) Thai Retail Banks

Foreigners who are married to Thai citizens can access Thai mortgage products from large retail banks through “joint-mortgages”. Another option that allows indirect access to financing is by lending to the Thai spouse and letting the foreign national act as a “Guarantor”.

However, in many cases, the foreigner must have an established record as a working professional in Thailand. This means you need to have a Thai Work Permit and proof of income coming from an established Thai company (typically for a continuous period of 1-2 years). In addition, the Thai spouse must also be a working professional since Thai banks are essentially lending based on the Thai national’s credit profile.

3) Standard Chartered

Standard Chartered is a good example of the previous item. It offers a home Mortgage loan facility to permanent residents working in Thailand for the purchase of condominium units. Meanwhile, non-resident foreigners working in the country may take out a loan under the foreign guarantor condition for the purchase of a condominium unit or landed property.

Requirements for permanent resident expatriates:

• Have an Alien Registration Book and Permanent Residence Book

• Working in Thailand

• Have proof of income earned in Thailand

Requirements for non-resident expatriates working in Thailand:

• Expatriate guarantor should have held the work permit in Thailand for at least 3 years

• Expatriate guarantor should have a registered marriage certificate with a Thai spouse or, if the marriage is not registered, a copy of the child’s birth certificate as evidence

• A Thai spouse acting as the main borrower

Visit Standard Chartered’s website to know more about the loan and the documents that you must provide.

Invest in a Thailand Property Today

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You now know that there are a number of options in terms of mortgage loans and financing that are available for foreigners who wish to buy a real estate property in Thailand. Keep in mind that the options you qualify for will depend on your individual circumstances. It’s best to consult a representative of the lending institution you’re considering taking a loan from.

Visit Conrad Properties to browse through Thailand’s many amazing properties for sale. Now is a good time to buy since prices have gone down.