The maze to a mortgage or credit, or not
Thailandblog has a new blogger at Yuundai from Hua Hin. Who he is and what does? You can read that in this posting where he introduces himself to the readers: www.thailandblog.nl/thailand/nieuwe-blogger-yuundai-stelt-zich-voor/
If you missed his first article, you can read it here: www.thailandblog.nl/uitgaan/Visit-aan-cheese-hua-hin/
Recently, while enjoying a drink, I got into a conversation with a number of Dutch people and a Belgian, falang about banks in Thailand and what their working method was, and how an application for credit or a mortgage was looked at.
I will try to bring some clarity to the chaos and the diversity of opinions that came to the table. Early on it was possible to draw the conclusion that one branch of a bank and the other branch of the same bank use completely different standards with regard to the same question! However, whether this has to do with the person asking the question, or the person being asked, I must leave unanswered.
The amount to be borrowed or the interest rate proposed by the bank may also vary considerably. So it seems obvious to shop around before making a decision.
Not only does the paperwork store you need to submit vary enormously, but so does the interest in the papers that come to the table. One person studies it very carefully, the other leafs through it a bit. According to my table companions, the banks do not differ in one thing, and that is that they do check how the obligations entered into in the past (if any) have been fulfilled, a kind of Thai Bureau Credit Let's say registration, the well-known BKR test in the Netherlands.
Another remarkable point emerged if you have a Thai partner or who also enjoys (demonstrable) income, then this is taken into account by the bank, if salary slips can be submitted, but also whether the person who issues these salary slips has passed the test of criticism. can withstand a longer period of time.
One of the interlocutors indicated that a bar-girl who used to be known to him and who was loved by falangs, who easily earned 60.000 baht or even more in a month of the high season, could prove this with her own slips but not with salary slips. That while a factory worker with 17.000 baht per month could do so in accordance with the bank's requirement and was therefore included in the request for credit or mortgage.
Registered properties ranging from a car, motorcycle or otherwise are also a welcome contribution to the credit rating agency, as security or surety?
However, if, according to one of those present, the Thai partner has run his own business for more than six months and is registered with one of the Thai government services, a kind of Thai "Chamber of Commerce" then the chance of getting a credit as high as possible.
A marriage to someone registered in Thailand also turned out to be one of the favorable variables when applying for bank financing.
Buying a house that has already been occupied yielded a considerably lower mortgage loan, only 50%, than a house in and as a new-build project.
In short, these are “only” a number of experiences that come to the table, which may be an impetus for readers who have such a question about financing a car or mortgage for a house.
With the recommendation to take into account the reaction to this article in your personal consideration.
The conversation and posting seem to be prompted by the question: How and where can I get top credit?
That in itself is not surprising. The search for a house often starts with the question: How much can I borrow?
However, I doubt whether people sufficiently realize that by asking this question, you are actually letting someone else determine how much (or how little) you still have to live, because of course interest and repayment have to be paid.
The maximum credit amount, which leaves you with a freely disposable amount per month that the lender thinks you will not (just) get into trouble, is often - almost automatically - also the budget.
I think that automaticity is wrong.
I don't think falangal people (except Americans) can buy a house/home and therefore cannot take out a mortgage on that house. It is possible for falang, in accordance with TH legislation, to purchase a condo and to take out a loan for that purchase. Although that loan is never 100%. An age criterion often also applies.
Via Google it is a piece of cake to read the full legislation on this via the "Condominium Act".
In my opinion, it is also not the case in TH that a mortgage in TH has the same scope as in NL. In many reactions about banks and loans, people reason like crazy, and they start from NL principles, as if they were the same in TH and offer the same protection.
However: in TH there is no special consumer protection. For example: in the Netherlands, after the purchase and mortgage deed has been signed by the notary, etc., the buyer is the owner of the purchased property. This is not the case in TH. In TH, after concluding the mortgage deed
tenant of his own building. The monthly mortgage installment is the rent you pay. In addition: TH does not have a notary who monitors the various deeds and compliance with applicable procedures. And in TH anyone can act as a broker. The fact that a lawyer is sometimes involved in the purchase does not mean that he represents the interests of the buyer. On the contrary.
In TH, all loans are hire purchase contracts. And with hire purchase, you are only the owner when the very last baht has been paid. Only then are you the owner of the purchased property. If you fail to make your (instalment) payment, the bank will confiscate your property. Whether it is a moped, a car, a condo, a PC or iPad. You cannot claim on installments already paid, nor may you sell your property (after all, it is owned by the bank) in order to pay the remainder of the loan. You can't do anything! Only after the last bath payment can you do what you want with your acquired property!.
In the event of non-payment, the bank will thus have collected the total of all monthly installments already paid, and on top of that, the bank will have full disposal of the property. The bank is in no hurry to sell it on. Sometimes a lot of money has already been earned on it. Resale will come. In other words: in the event of non-payment, you must hand in the good on the spot and immediately or leave home and hearth. A judge is not necessary because the (im)movable property is owned by the bank, and you cannot meet the obligations.
Please note: with normal installment purchases or with lease contracts, the bank sometimes takes possession of the property after 3 notices of default, but the buyer is still contractually obliged to pay the final installment. You can take out a new loan for this purpose. Only then can you get it right again.
If someone has purchased a building, for example a condo, with borrowed money, then after full payment of all monthly installments, they will receive proof of this, plus the bank will take the chanoot from the safe. With which that person is registered as the owner after registration with the Land Office. This is also the case with a car: after payment of the last installment you will formally receive the blue car papers/blue car booklet. Well, I think: enough fodder for discussion!
I was already amazed at the story, starting at the top of this post.
Like the Mr. Soi describes his story, this comes closer to reality.
When a Thai buys a house on credit, the Chanot title deed is in the safe at the bank.
I (so my Thai husband) bought the plot and house next to us 6 years ago.
We had to wait a while at the local land office before the bank employee arrived with the chanot.
Because my neighbors at the time, as it turned out, also had a mortgage.
Also, in the case of mutual loans, i.e. with another Thai who has money, the Chanot or, in the case of vehicles, the blue ownership book for cars or the green ownership book for motorcycles and mopeds is handed over to the lender.
This, of course, means that the lender wants some certainty, because very often there is no repayment.
That is why there are many motorcycles for sale of which the owner, say, cannot show a green book.
So be careful before you buy something.
Jan Beute.
@ Soi, makes sense. You only own the relevant good when EVERYTHING has been paid. Although, years ago, I sold a pickup while it was still financed. The buyer paid the rest (200.000) debt and I got the registration booklet, this was done with the permission of the finance. Then to Bang Lamung and transferred to the buyer's name, a Thai. Got 100.000 left over what the buyer paid me as the rest of the deal.
There is a company in Bangkok that specializes in loans to foreigners (Farangs), namely MBK Finance, part of the large department store in Bangkok.
MBK Guarantee Relationship Department
8 fl. MBK Center, 444 Phayayhai Rd, Wangmai, Pathumwan. Bangkok 10330
Tel: +66 (0) 262- 7877 Our contact man was Stuart Maxwell Foulkes
They once helped us with a temporary mortgage (50%) on an apartment, which worked out fine. A lot of paper work of course and you also have to have a clean past.
Hello Yuunday,
If you read everything like this, you still get the itch to buy something or read money at all.
We all know that most of the gentlemen's advocate is on hand with the Thai through a nice moorkop with a cup of tea.
Suppose I want to buy a condo, say 5 million, but I don't want to sell my house, which of course has been paid in full.
What interest rate should I expect for those 5 million?
I've heard so many monkey stories / percentages.
Over 20%.
I know it's impossible to say exactly, but what should one think of???
LOUISE
Louise, buying something and borrowing money for it is usually born out of a lack of money or. do not have sufficient funds of their own.
Money lenders in Thailand have their own rules and they are not comparable to those in NL.
If you take out a loan, you know the rules, if you don't find them acceptable, you don't borrow and you can't buy.
As long as you meet the agreed rules and conditions, you don't have to get the jitters.
In Thailand things are very under control, the lenders have no tolerance there, but yes, it is no exception that Thai debtors just disappear and let things go.
As for your question what the interest rate could be for buying a condo, that depends so much on your personal situation, age, security and continuity of income, the object you want to offer as security and the different policy per bank, that you can only find out about this by going shopping.
Success.
Nico B
In his response, Soi describes everything as it is, and Thai banks also charge differently when determining the interest.
If you buy a car and you want to calculate the interest of the loan / repayment and use a NL / B program for this, you will end up with a lower amount than the calculation of a Thai bank. I speak from experience and everyone can take the test themselves
Eddy, what you say is correct.
Not unusual, buy a car, price THB 500.000, interest seems attractive, 5%, interest and repayment period 5 years.
But then the monthly term of interest + repayment will be as follows: 500.000 to 5%/year. X 5 years = 125.000 + the principal sum of 500.000 is 625.000 : 60 months = THB 10.400, rounded to 10.500 per month.
Which actually amounts to about twice the interest rate than the apparently attractive 5%, you already pay off part of the loan from the 1st monthly payment, while there is no interest rate reduction.
Nico B
@ NicoB, that's also true and that's why I also sold my financed pickup. Was my 1st here and only found out about that interest when I, or we, had already financed it. Years ago.
Well, not everything has to work the same as in the Netherlands.
But on the other hand, you will not find a personal loan in the Netherlands with an interest rate of 5%, but rather of 14%.
So whether the two differ so much from each other and which of the two is cheaper, remains to be seen.
As always the most possible different reactions. The closest to reality is that of Soi. Apparently there are people here who confuse a mortgage loan with a private loan. After all, you cannot take out a mortgage loan for a car, a motorcycle or any other movable property. Not in Thailand, not in the Netherlands and not in Belgium.
The description “hire purchase contract” is simply renaming the child. If you do not pay off your mortgage debt in the Netherlands and or Belgium, the bank will also lay its hand on the property. In case of real defects, a "forced" sale is then made. If the amount of the sale does not exceed the loan amount, the defaulting person will be left with a residual debt that must also be paid off further. The big difference, compared to what I read here in Soi's explanation, lies in the fact that the amount already repaid is charged and apparently not in Thailand??? Do keep in mind that in the first years only “interest” is paid off and no capital. Capital reduction only starts when the interest has been paid off and with a term of 20 years, this is roughly the first 5 years.
As a Farang, I wouldn't start taking out a mortgage loan in Thailand. The problem of property rights plays too great a factor of uncertainty for the future.
LS Lung addie
I came across the entire matter surrounding TH and mortgage in recent months after a nephew of my wife indicated that he wanted to sell his property for a larger person, and that he had encountered a penalty clause when paying off his mortgage loan. He had only lived there for a short time, so selling the property within 5 years will therefore give him that extra cost item.
Except that in the Netherlands a mortgage simply gives someone ownership rights, in TH this is not due to the hire-purchase nature of the loan, and the penalty clause is a different kind of difference. In the Netherlands, this occurred on properties for which a government or municipal subsidy or premium had been granted, which premium was earned by the obligation to continue living there for 12 years, for example. In the Netherlands, quite a few properties from the (municipal) rental sector are being sold nowadays, whereby it is notarially determined that they may only be resold after one year, given the lower comparable purchase value.
With nephew, the term of his mortgage/hire purchase is 30 years, and the loan amount plus interest is divided into 360 parts. Comparatively, more interest is paid in the first years than, for example, in the second half of the term, but this provides him with considerable advantages in his tax return. Almost all interest payments are deductible from the taxes payable at the TH Fiscus, as was previously the case in NL. In short: in that sense, this system is almost entirely similar to the annuity mortgage known in the Netherlands. In TH it also applies that the build-up of the repayment takes place during the term, and that interest is not only paid in the first years, as suggested by a commenter.
The difference between mortgage and rental purchase therefore lies in the status of “ownership”. In the Netherlands, you also become the owner by law through a mortgage. With all the joys and burdens. In TH you do not become the owner, the bank is. No pleasure for you. As long as you transfer the monthly installments, that doesn't matter. Only if you can no longer pay and you are considering selling, whereby you can pay your remaining debt from the sales price, and hopefully still have some left over, so that it turns out that you have not paid all those months for nothing: look, then the bank will take a stop to it. Any added value is not up to the “seller”, but to the bank. And he had already collected all those monthly installments. See here the big difference between mortgage and hire purchase, which does not simply involve “giving the child a different name”. After all, a radio is not just a broadcasting station. See here also the answer to the question why borrowing in TH is so common and common. A bank almost always benefits from this. It now becomes clear why many Thais, when they are unable to pay, give up, give up on Maarten and call it a day. Sometimes with the northern sun. One is only a loser, nothing is shared, everything is lost, nothing is on the horizon.
My nephew, with a very good job and corresponding pay, has paid extra every month since the start of the term. Not the interest, but of the loan amount. Contrary to what is stated, that loan amount has become smaller every month. Monthly installments were then adjusted every six months. Now that he burps so well, will; he show that and live bigger. He adds that fine, and that with it the redemption advantage also disappears: he takes that into the bargain. After all: those who have it wide, let it hang wide!
Oh well, none of it matters. For a farang, except for an American, a mortgage for a house is almost out of reach. Unless you buy a condo, which transaction has extensive legislation. With which property rights and the (un)certainty factor are legally guaranteed. But if and how you can leave a condo to your children? That's another story!