When buying a property, buyers need to ask many questions:

  • Why am I buying a property?
  • Am I looking for a permanent residence?
  • Do I want to go on vacation?
  • Or is this property an investment to generate rental income and make a profit upon sale?
  • Do I want to invest in my home country or look for opportunities abroad?
  • How do you finance a condominium in Thailand?

    • The most important question is:

    Although the process may be similar in most countries, each country has its own rules and regulations that foreigners must follow. Thailand is no exception.

    Before you decide to buy a property in Thailand, there are some important things you should know about the country.

  • A foreigner cannot own Thai land in their own name.
  • The only property that a foreigner can legally acquire in their own name as unrestricted ownership is a condominium.
  • Foreigners can only acquire land through a lease agreement.

    • A common misconception is that foreigners cannot finance Thai real estate through a financial institution. While the options are limited and the requirements quite strict, it is possible.

    This article will show you various ways to raise capital to buy your dream property in this beautiful country. We will highlight the advantages and disadvantages and explain the buying process step by step, regardless of your choice.

    We will focus on condominiums, as these represent the easiest and safest form of real estate acquisition for foreigners.

    Before we look at how you can finance your property in Thailand, there is an important question that many forget to ask: "Should I seek legal advice?"

    The simple answer is: “Yes!” Investing in real estate is a far-reaching decision, and it's rare not to seek advice from real estate law experts in your own country. If you're planning to buy in a country whose culture, language, regulations, and real estate law are unfamiliar to you, hiring a reputable real estate lawyer is the responsible course of action.

    Later we will show you exactly what your lawyer does for you and why you need one.

    What is a condominium?

    First, we should get an overview of what a condominium is and what different ownership titles are registered for a condominium.

    A condominium complex is a building with both private and communal ownership. The owners of a condominium complex own the property through a legal entity, the owners' association. (The Condominium Ownership Act – the Act on Jointly Owned Residential Property of 2522).

    Simply put, a condominium is a residential unit within a larger building complex. The owner has full ownership of the unit and a share of the common areas. Foreigners can buy and sell condominiums in their own name.

    Under Thai law, foreigners are only permitted to own 49% of apartments in residential complexes. Your lawyer will verify this as part of their due diligence, as you certainly don't want to discover only after a settlement that your chosen apartment doesn't meet the foreign ownership quota.

    How do titles affect my property?

    In Thailand there are two forms of ownership under which a foreigner can acquire property – freehold and leasehold.

    Property rights – Foreigners can acquire property rights in their own name. The Thai Land Registry issues a title deed, which is similar to a subdivision deed.

    Condominiums are the only form of real estate that foreigners can purchase as full ownership. Therefore, they are a popular and easiest purchase option. One advantage of full ownership is that it can serve as security for further investments.

    Lease – A foreigner may own a physical structure (a property) as a beneficiary, but the land on which it stands is owned by a Thai national or a Thai limited liability company.

    You can lease the property for up to 30 years, with the option to extend the lease to up to 90 years.

    The lease agreement is registered with the Thai Land Registry, and if the property is sold during the term, the new owner takes over the existing lease agreement.

    Although leasehold titles often refer to villas or houses and plots of land, it is important to understand that in popular tourist areas such as Phuket and Pattaya, these titles are sold as leaseholds.

    Financing options for foreigners

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    As the saying goes, "Cash rules the world." If you have sufficient liquidity to purchase a property, buying with cash is the simplest option.

  • You are the sole owner of the property.
  • You don't need to seek financing in your home country.
  • You don't need to worry about interest rates, loan terms, and repayment.
  • With the right legal support, the time from contract signing to completion and handover can be significantly reduced.
  • High initial capital investment.
  • The need to raise funds for the purchase.
  • Possible limitations on purchase options due to budget constraints.
  • No external financing is available if you are buying for investment purposes.

    • Even if you are fortunate enough to have the necessary funds to purchase a property, there are still regulations that you, as a foreigner, must observe when buying.

    All funds for the purchase of real estate on behalf of a foreigner must be in foreign currency and have clear proof of the origin of the funds (withdrawal from the originating bank), the purpose of the funds (purchase of a condominium) and proof of currency conversion on the Thai recipient account (Foreign Exchange Transaction Form or FET form).

    This can also be advantageous for you, as you often get a better exchange rate when exchanging money in Thailand than if you were to exchange your money in your home country and then transfer it.

    Your real estate lawyer can assist you with the money transfer. They will advise you on the disbursement of funds upon transfer of ownership, help you transfer the money from your home country to a Thai bank account, and settle any applicable government fees and taxes once your property is registered with the Thai Land Registry.

    Financing in your home country

    If you do not have excess cash but do have available real estate assets in your home country, then it is possible to finance your purchase through your existing financial institution.

  • You already have a business relationship and a credit history with your credit institution.
  • Interest rates, loan terms and repayment conditions are generally better.
  • They will service the debt in their national currency.
  • The payout and access time for the funds will be shorter.
  • They deal with property valuations for properties that are already in their possession.
  • You may have better loan-to-value (LTV) ratios to access equity capital.
  • You may have a larger budget for purchases than if you were relying solely on cash.
  • If you are buying for the purpose of investment/resale, you can use your borrowing to achieve a higher profit.
  • You will have to service higher debts in your country.
  • You may need to extend the term of your existing debt, which will increase the time until you fully own your existing home.
  • They are liable for fluctuations in interest rates.
  • If you purchase a rental property in Thailand, you may be required to provide your institution with a lease agreement.
  • Some institutions do not accept foreign rental income to service debts in your country.

    • Financing in your home country is a viable option; however, it is advisable to seek financial advice before making a decision. Many countries have strict regulations regarding lending and foreign investment.

    To take Australia as an example:

    Following the 2008 financial crisis, many banks in Australia pushed for a lending and investment policy aimed at reviving the property sector.

    In 2015, many homeowners were financially over-indebted and struggling to service their loans to their banks. The Australian Prudential Regulation Authority (APRA) took a hard line against banks and their responsible lending practices.

    Borrowers were required to disclose the intended use of new funds, and new regulations were introduced stipulating that funds for investment were subject to lower loan-to-value ratios and shorter maturities. Funds for foreign investment were considered high-risk and subjected to rigorous credit scrutiny.

    To ensure responsible lending by financial institutions, customers had to be in a more secure financial position to be able to take out loans.

    Foreign financing

    As mentioned previously, the options are limited, but there are financial institutions that offer real estate financing to foreign investors in Thailand. These institutions are based abroad, for example in Singapore, but maintain branches in Thailand.

    There are three main companies that offer financing to foreigners: Bangkok Bank (Singapore branch), United Overseas Bank (UOB), Industrial and Commercial Bank of China (ICBC) and MBK Guarantee Co., Ltd (MBK).

    We will consider the advantages and disadvantages of foreign funding and then outline the specific requirements for each institution.

  • Using your property in Thailand as security for a mortgage.
  • Option to use rental income to pay off loans.
  • Building a relationship that will encourage further investment in Thailand.
  • Financing options for a purchase in Thailand if you cannot obtain financing in your home country.
  • Build a credit history in Thailand.
  • Higher interest rates – The interest rates will be higher than those offered to a Thai citizen locally or those that are common in your country.
  • Shorter loan terms – The institutions offer loan terms of 5 to 15 years and stipulate that a loan must be fully repaid before the age of 60.
  • Lower loan-to-value ratio – Some institutions offer a loan-to-value ratio of up to 75% of the property value, but it is usually around 50%. The loan-to-value ratio can depend on the loan amount.
  • The loan must be repaid in a foreign currency – this can lead to excessive fees and is susceptible to exchange rate fluctuations.
  • Strict lending and service criteria.
  • Strict regulations for foreign residency status.
  • Accessible only to certain nationalities.
  • Real estate can only be purchased in certain areas.

    • Banks and institutions that grant mortgages to foreigners in Thailand

    United Oversea Banks (UOB)

    UOB is a multinational bank headquartered in Singapore. The bank offers international real estate loans in Singapore, Malaysia, Thailand, Japan, Australia, and the United Kingdom.

    UOB financing terms for real estate in Thailand:

  • The property must be located in Bangkok or at selected locations.
  • For investment and residential purposes only.
  • The loan-to-value ratio is up to 70% of the appraised value set by the state or the purchase price (whichever is lower).
  • For foreigners with a work permit in Thailand, the applicant's minimum salary is 140,000 THB, provided they have been employed under the work permit for at least two years. Otherwise, the loan must be repaid in SGD or USD.

    • One advantage of a financial business relationship with UOB is that you can diversify your portfolio and acquire properties in different countries – Thailand, Singapore, Malaysia, Japan, Australia and the UK.

    Industrial and Commercial Bank of China (ICBC)

    ICBC is a Chinese, multinational, state-owned commercial bank. The bank provides mortgages to foreigners who wish to purchase real estate in Thailand.

    The bank considers applications from people of all nationalities, but focuses on Asian markets and prioritizes applicants from China, Hong Kong, Macau, Taiwan, Singapore, Malaysia and some other nearby Asian countries.

    ICBC Real Estate Financing Conditions in Thailand

  • The property must be located in Bangkok and the surrounding area, Pattaya or Phuket.
  • Only available for completed condominiums (no new construction projects) with a market value exceeding 2.5 million THB.
  • Loan amount of 1.5–15 million THB
  • Loan-to-value ratio up to 60–70% of the government-determined value or the purchase price (whichever is lower).
  • For foreigners working in Thailand under a work permit, the minimum salary for an applicant is 80,000 THB with a minimum employment period of one year.

    • MBK warranty

    The MBK Guarantee allows applicants of all nationalities to apply for a loan without having to work or live in Thailand. Applicants can apply for a loan and use their existing property as collateral.

    MBK Guarantee does not consider financial documents or income when granting loans. They provide loans secured by a property you already own in Thailand.

    You must already own property before you can take out a loan to finance another property.

    MBK Guarantee Financing Terms and Conditions in Thailand

  • The property must be located in Bangkok or in selected key locations.
  • Loan amount starting from 1 million THB
  • The loan-to-value ratio is up to 50% of the appraised value set by the state or the purchase price (whichever is lower).
  • Payback period up to 10 years
  • Apply for a loan using a condominium as collateral.

    • The MBK Guarantee is considered the leading foreigner-friendly mortgage option in Thailand. If you already invest in Thailand, there are no restrictions regarding nationality, residency status, employment status, or marital status. Foreign income can be used as a reference and for approval.

    The lesser-known financing options

    Local financing

    Those who have been enjoying life in Thailand for several years and meet certain residency criteria can apply for local financing.

    There are domestic and international banks that offer loans to foreign nationals in Thailand. These include HSBC, Siam Commercial Bank (SCB), Thai Military Bank (TMB), and Tisco Bank.

    These banks offer better terms, but have strict residency requirements. Applicants must possess (at least) a foreigner's registration book proving their permanent residency status in Thailand.

    You can apply for a loan if you fall into one of the following categories:

  • Work in Thailand with a work permit for at least 1-2 years and have a stable income.
  • Thai Permanent Residential Permit (PR) – PR holders may receive more credit options with less stringent conditions.

    • Spousal financing

    Many expats move to Thailand and find love there. It's perfectly natural to settle down and build a future with your partner. If you marry a Thai citizen, your partner can apply for a mortgage, with you acting as guarantor. Both Thai partners and foreign guarantors must be employed, have a stable income, and a good credit rating.

    This method has one major advantage and one major disadvantage.

    Your spouse can apply for a loan at any Thai bank where they are already a customer. They will benefit from all interest rates, loan terms, loan-to-value ratios, and repayment options available to Thai citizens.

    As a guarantor for your spouse's loan, you are not the owner of the property! The mortgage and the land registry entry are in their name. You have no legal ownership rights to the property you are acquiring.

    This shouldn't discourage you from building a house with your spouse. However, should a divorce occur, you may not have legal claims to a property you helped finance. If you are considering this scenario, it is essential to speak with your lawyer.

    Your real estate lawyer

    It may sound a bit like a broken record, but for a foreigner who wants to invest in/acquire real estate in Thailand, finding a good lawyer and investing time and money in them is the best decision you can make.

    A trusted real estate lawyer saves you time, avoids frustration, and helps you avoid potential financial losses or legal disputes. They are essential if you plan to finance your property through a financial institution. They are the expert.

    To give you a real understanding of how your lawyer helps you, let's look at what he actually does.

    To finance this, they will do the following:

  • Review the loan documents and interpret them if necessary.
  • Assistance with the disbursement of loan funds to the respective parties.

    • During the purchasing process, they will:

  • Conduct a thorough due diligence process. This includes researching the background and history of the sellers, the development companies, the buildings, and any potential legal complications related to the points mentioned above.
  • Ownership searches are conducted. This includes confirming that the ownership details match the data recorded in the land registry; that the seller is the legal owner of the property and authorized to sell it. It is also checked whether there are any existing mortgages, liens, debts, or pending legal proceedings against the property.
  • Carefully review purchase agreements to ensure all details are accurate and fair for both buyer and seller. Unlike in Western countries, Thai contracts often focus less on specific figures and more on the relationship between buyer and seller. It could be described as a gentleman's agreement or handshake deal. Unfortunately, this means that important terms or clauses may be missing. Your real estate lawyer will translate the contracts and advise you on key clauses to include for your protection. Contract review is essential when buying condominiums, especially in tourist areas like Pattaya or Phuket.
  • Coordination of money transfer and payment. In any real estate transaction, money is the most important aspect. We will explain this in more detail later, but your lawyer will confirm the amounts due (including land registry fees, late fees, and other charges), who bears the costs, and how payment will be made (payment schedule). Your lawyer will ensure that all payments and deadlines are fair for both parties and will review any hidden or ongoing costs with you.
  • Attend the property transfer and registration at the Land Registry. Your lawyer will receive and hand over all relevant documents during the transfer. They can then act as your contact at the Thai Land Registry to register all documents and pay fees and taxes as per your contract.
  • Protect your assets. A trusted law firm can help you identify future risks. What happens in the worst-case scenario of your death? We often create a will in our home country to ensure our estate is secure upon our death. Thailand does not recognize foreign wills, and they can be contested in court. Thai lawyers can help you create a will valid in Thailand that covers assets located exclusively in Thailand. While not part of the purchase process, it is an important aspect often overlooked when considering protecting our assets and providing for our spouses or dependents.

    • During the buying process, you will work with many service providers – real estate agents, financial advisors, developers, and real estate lawyers. It is worthwhile to take the time to find reputable professionals with whom you can build a good relationship.

    Further financial considerations

    Regardless of how you plan to finance your property in Thailand, there are other financial aspects to consider besides the purchase price.

    Currency exchange rates – The timing of your money transfer is important due to exchange rate fluctuations. You should transfer at least enough to cover the purchase price and fees. If your currency is strong, you can save money on the purchase. However, if it weakens, you may have to spend more of your own currency.

    Ongoing costs – When purchasing a condominium, annual service charges (CAM – Common Area Management) and payments to the maintenance fund are incurred. In addition, there are property taxes, registration fees, and, if applicable, income tax if renting.

    Interest and repayment: Loan interest rates fluctuate, and your repayment installments may change. Many banks charge early repayment fees if you pay off the loan quickly and often require you to take out certain insurance policies before approval.

    Real estate agent fees: Your trusted experts need to be paid. They provide a service and are worth their money. Investing in professionals ensures that your entire property buying and selling process is simple and stress-free. This helps you avoid potential financial pitfalls in the long run.

    Diploma

    Ultimately, you have many options when buying a condominium in Thailand. However, there are some restrictions for land and houses. Our lawyers can show you alternative ways to acquire real estate indirectly. You will receive a comprehensive overview of your options, the experts who can support you, and how to begin the process.

    Thailand is a beautiful country, and every year hundreds of foreigners choose to visit and settle there permanently, whether for lifestyle reasons or to invest. The process may sometimes seem complicated, but if approached correctly, it is quite simple.

    Real estate lawyers | Lawyers specializing in property law

    If you want to buy your dream property in Thailand, sound legal advice is essential. A qualified real estate lawyer familiar with Thai law will advise and support you throughout the entire purchase process and take care of all the formalities.

    Siam Legal is a registered law firm with over 20 years of experience in real estate law. The team maintains offices in the major metropolitan areas of Bangkok, Chiang Mai, Pattaya, and Phuket and is intimately familiar with the specific conditions in each location.

    You can contact the Siam Legal office at the following address:

    Address: Two Pacific Place Building, 18th Floor, Unit 1806, 142 Sukhumvit Road, Klongtoey, Bangkok 10110, Thailand. Phone: +66 2 254 8900 Mobile: +66 84 021 9800 Website: www.siam-legal.com Opening Hours: 9:00 AM – 6:00 PM