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Bangkok Bank has broken ranks with the Thai banking establishment to become
the first Thai bank to offer mortgages targeted firmly at foreigners wanting
to buy property in Thailand.
The mortgages are fairly limited in scope – they can be applied only to
condos; the buyer must come up with the first 50% of the purchase price; and
the mortgage term is only 10 years – but they are being hailed as a
breakthrough by property developers and
real estate agents.
The inability of foreigners to get mortgages to cover home purchases in
Thailand has put developers and real estate agents at a disadvantage when
compared with other tropical destinations where mortgages are available.
The loans, launched quietly over the past couple of months, are available
through Bangkok Bank’s branches in
Singapore and
Hong Kong, and will
normally be denominated in US, Hong Kong or Singapore dollars. Other
currencies may be considered – but not baht.
In Hong Kong, where branch General Manager Phaithul Tejasakulsin said the
bank has made “one or two” loans, the amount that can be borrowed ranges
from HK$1 million to HK$5 million (approximately 5 million to 25 million
baht). Loans are made only to Hong Kong residents.
In Singapore the range is from S$100,000 to S$1 million (about 2.5
million to 25 million baht) The loans currently carry annual interest of
around 7.5%.
In addition there are fees attached. In Hong Kong, for example, a
processing fee of around 125,000 baht is payable when the borrower accepts
the bank’s letter of offer. About 50,000 baht of this is refunded when the
loan is drawn down. In addition, at the start, 1.5% of the loan amount must
be handed over to the bank as a “prepayment fee”.
The Head of the Thai Desk at Bangkok Bank in Singapore, Yaovaluk
Suksathit, said that the bank there had made more than 20 loans. The
Singapore branch has been pushing the service more aggressively than Hong
Kong.
For example, in Hong Kong mortgages are available only for buying
freehold condominiums, whereas in Singapore loans will be considered for
other types of property, including homes on leased land, said K. Yaovaluk.
“It all depends on the structure,” she explained. “We have done some.”
The average mortgage to foreigners granted so far by Bangkok Bank in
Singapore has been about US$200,000 (8 million baht), she told the Gazette.
The mortgages may be available later through other Bangkok Bank branches,
said K. Phaithul – the London office, for example. “I think [the bank] will
probably look at it,” he said. Hong Kong, Singapore and Britain are regarded
as the three major markets for Phuket home buyers.
K. Yaovaluk said that she and her team had visited Phuket and Koh Samui
over the past couple of months to talk with property developers. This was
apparently news, however, to the President of the Phuket Real Estate Club,
Phummisak Hongsyok.
He welcomed the scheme, however, praising the management of Bangkok Bank
for having “good vision and professionalism”, and for a move that will
benefit Thailand and the
Phuket
property sector in particular.
“Thai banks have never loaned money to foreigners to buy property because
it was difficult to secure the loans when a foreigner could not own land in
Thailand,” he told the Gazette.
“There are many expatriates in Hong Kong who are interested in buying a
home in Phuket because the cost of property and land here is cheaper than in
Hong Kong,” K. Phummisak noted.
“Bangkok Bank has good vision and has increased the opportunities for
people interested in having a house in Thailand.”
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