what is the cost of money ?

[BelgianBoy]

Hi,

 

Does anyone have an idea of the cost of a morguage loan ?

Wife does not live here, no income here, but more that enough properties as garantee.

 

Just as an idea, what is the cost of 1 million Bt on 10 or 20 years ?

 

Reason is that there is a very cheap ooportunity coming up in our soi.....to good to pass over !

 

Also, would the fact that all properties have a 30 year lease to me, be an obstacle ?

 

Thanks.

 

BB

 

 

[Mekong]

Been a few years since I have used bank financing for properties in Thailand so my info may be a bit dated.

 

Usualy rates are linked to Minimum Lending Rate (MLR) with many institutions offering sub-MLR packages for first couple of years then MLR + 0.5 or 1% depending on deal you broker.

 

A Hyperthetical 1 Million Loan over 10 Years at MLR of 5% would work out at 13-14K / month over the loan period.

 

From your perceptive with no proof of income in Thailand but having paid up assets over and above loan required I would recomend that your wife looks into refinancing current assets to support future purchases rather than try to apply for direct finacing of an additional property. It is a lower risk proporsition for the finance companies.

 

Disclaimer [color:blue]this is just my opinion and does not reflect what the actual "Best Case Scenario" is in your circunstances. Never follow advice from a Bar or an Internet forum.[/color]

[dddave]

Lately the government has been making noise about Thais buying property financed by foreigners. They have threatened to investigate any Thai buyer who suddenly comes up with the money for a down payment instead of it being deposited over a long period of time. This has mostly centered around Phuket and as far as I know, has only remained talk but you should be cautious.

[Mekong]

dddave,

 

After the number of years that BB and his wife have been playing the Thai propery market I am pretty sure that they are both aware of the potential pitfalls, the question was more about finance and not Risk!

 

 

[BelgianBoy]

Thanks both of you for the input.

 

Went to the bank yesterday and yes, refinancing or taking out a morgage on one property would have been the correct way to go, specially as the intrest is quite low.

 

And dddave, we know the risks, no problem for us.

My wife does not reside here, has no work related income here, only income from rent.

 

Anyway, looks like the sale will not happen as my bid has been rejected.

Mai pen rai, many fish in the sea....

 

BB

 

[buffalo_bill]

How much is the interest then ?

 

Nothing to do with your question but still maybe worth a thought : to keep your own money safe though all is in the name of a Thai citizen , structures like usufruct etc might be worthwhile being considered .

 

But , as my close ally mekong already so wisely said : don't trust anything you read on the net .

[BelgianBoy]

I am just back from a long meeting at the bank.....

 

First of all TIT, rules are rules, and are not to be bend, need to show income.

Income from work or compay, rent is not good enough.

No use to try to make them think outside of the box at all....

 

Obtaining a morgage on existing property if not living in Thailand and no income in Thailand is a big no-no here.

 

But, alternative suggestions from the bank : bring the needed capital here for them to block and I can get a loan for the same amount at 2 %.

 

Or a classic alternative : get a family member with the necessary proof of income + morgage !

Normal intrest then is 4 % the first year, variable after that.

Cheaper in Europe....

 

Fuck that, I dont need the aggravation.

Will reconsider if to proceed with cash, or keep my profitable equities abroad.

Dinner with the owners tonight, I already know they will now propose installment payments to sweeten the deal.

Who knows ?

 

Bubile, all properties here are in my Thai wifes' name, each time with a 30 year lease, and covered with a will, same same as usefruct.

On purpose did not go for the company route, first of all not 100 % legal and kosher, secondly one can only own 49 % even though you have control on all other 51 % of shares.

Plus yearly cost of bookkeeping, tax return, etc....

 

BB

[buffalo_bill]

Obtaining a morgage on existing property if not living in Thailand and no income in Thailand is a big no-no here.

 

BB

 

You may replace " Thailand " by a lot of country names . Basel II rules do [color:red]usually[/color] not allow that .

[BelgianBoy]

Quite silly for a bank to throw good business away like that no ?

 

Imagine, for the sake of the argument, you want to buy a property valued at 5 million, and you are willing to put a morgage on a property valued at 9 million, minus a margin 25 % in case of forced sales, the bank is always in a win-win situation.....

 

Mai pen rai.

 

BB

[buffalo_bill]

This might be a good enough position for a private arrangement , but the iron rule of any bank loan is that the regular return of the money according to the payment scheme for the mortgage has to be foreseeable . Many people do not know or understand that principle .

 

Apart from the Basel II rules in many countries foreclosures can take up to 8 years to execute and the banks do not want that even if they definitely get their loan back one day . People willing to buy holiday homes abroad usually face this difficulty which is why for example Portuguese banks ( much to my delight ) open branches in the UK to overcome this problem .