The banks MO in LOS when you want a mortgage
The banks MO in LOS when you want a mortgage
Must say, that I'm a little surprised at the way they operate when it comes to property, not sure if this should be in 'Legal, visa and finance', but I'll put it here.
Have done a slightly investigative exercise for future use and it appears that when you go to a developer, there is usually an affifiated bank that works with them and they submit your details to the bank in question. Bank then informally says that they will give you so-and-so % mortgage and then you place the initial deposit to remove the plot from the open market and get the chanote/deeds in the name of the Thai etc.
Then you pay the main deposit and the developer builds. 2 months before the house is completed then you apply officially to the bank and they make their offer official after the house is finished and they have checked it. You pay the fee for the contract with the bank and for it to be put in the bank, then off you go paying the mortgage.
Funny thing was, when I went into the bank they asked about how much you wanted to buy and how much % you expected to get. So, it appears that the value of the house is at your discretion and then you get 80% (or whatever) of what you asked, so long as you qualify for that amount.
So, you build on the premise that what the bank has informally approved you for, later gets approved officially. Developer is OK, as you have to down say 200k on a 2 million baht house (10%) and he can sell to someone else if it all goes south. The bank is also fine too as it hasn't approved anything until the house is finished. You, as a buyer, are exposed for the 200k deposit, OK, not too much but you seem to be the only one exposed.
As regarding another thread about developers, this is a good reason for only paying your 10%, no matter what.
Odd way for they banks to do it. Had a look round where I am and the banks involved where I checked were the SCB and Kasikorn.
Have done a slightly investigative exercise for future use and it appears that when you go to a developer, there is usually an affifiated bank that works with them and they submit your details to the bank in question. Bank then informally says that they will give you so-and-so % mortgage and then you place the initial deposit to remove the plot from the open market and get the chanote/deeds in the name of the Thai etc.
Then you pay the main deposit and the developer builds. 2 months before the house is completed then you apply officially to the bank and they make their offer official after the house is finished and they have checked it. You pay the fee for the contract with the bank and for it to be put in the bank, then off you go paying the mortgage.
Funny thing was, when I went into the bank they asked about how much you wanted to buy and how much % you expected to get. So, it appears that the value of the house is at your discretion and then you get 80% (or whatever) of what you asked, so long as you qualify for that amount.
So, you build on the premise that what the bank has informally approved you for, later gets approved officially. Developer is OK, as you have to down say 200k on a 2 million baht house (10%) and he can sell to someone else if it all goes south. The bank is also fine too as it hasn't approved anything until the house is finished. You, as a buyer, are exposed for the 200k deposit, OK, not too much but you seem to be the only one exposed.
As regarding another thread about developers, this is a good reason for only paying your 10%, no matter what.
Odd way for they banks to do it. Had a look round where I am and the banks involved where I checked were the SCB and Kasikorn.
Resolve dissolves in alcohol
Re: The banks MO in LOS when you want a mortgage
Strange I thought the bank would pay staged payment to the builder so your mortgage would increase up to the 80% on completion
I guess this way the builder will also factor some additional cost in to the price as he has to finance the build till the bank pays the 80%
The exposure is a bit of a strange thing and really is not on the build as the builder would of soon done 200K of foundation works IMO and even if you keep neck and neck with staged payments the biggest exposure is ending up with an 80% build 80% paid for on land that you have no offical registration etc at the land office to use/lease etc.
If it all goes wrong at this stage it's the legal avenue based on the signed contract you have drafted with your solicitor as having the deeds that are not registerd is probably worthless and the builder is not going to sign over till the end else he is exposed if you default as he can't sell on to someone else if you have the lease etc.
I guess this way the builder will also factor some additional cost in to the price as he has to finance the build till the bank pays the 80%
The exposure is a bit of a strange thing and really is not on the build as the builder would of soon done 200K of foundation works IMO and even if you keep neck and neck with staged payments the biggest exposure is ending up with an 80% build 80% paid for on land that you have no offical registration etc at the land office to use/lease etc.
If it all goes wrong at this stage it's the legal avenue based on the signed contract you have drafted with your solicitor as having the deeds that are not registerd is probably worthless and the builder is not going to sign over till the end else he is exposed if you default as he can't sell on to someone else if you have the lease etc.
Re: The banks MO in LOS when you want a mortgage
Banks also operate independently from each other so if a bank in 'town A' says no to a mortgage or loan simply try the same branch in 'town B' and you maybe surprised! We have been refused point blank by banks in Hua Hin but elsewhere they've tried to throw cash at us.
Go figure!
Go figure!

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Re: The banks MO in LOS when you want a mortgage
What do you mean by the bit I put in bold Spitfire? reads like you're saying it get put in buyers name, which would be rare imo for something as small as 200k, if paying the full land value then yes, otherwise massive risk to developer.Spitfire wrote:Bank then informally says that they will give you so-and-so % mortgage and then you place the initial deposit to remove the plot from the open market and get the chanote/deeds in the name of the Thai etc.
I'm sure they'll be sending their surveyor out to value it themselves!?, that's standard from what I've seen. You might be able to 'sweet talk' him a bit though, if it's in everyone's interest.Spitfire wrote:Funny thing was, when I went into the bank they asked about how much you wanted to buy and how much % you expected to get. So, it appears that the value of the house is at your discretion and then you get 80% (or whatever) of what you asked, so long as you qualify for that amount.
Are you sure you will not be paying stage payments as the construction progresses, would be rare especially if land is already transferred. But it maybe something this developer is offering to get ahead of competitors, you mention he has arrangement with bank, so he maybe getting cheap finance, or cash-rich ofcourse.Spitfire wrote:So, you build on the premise that what the bank has informally approved you for, later gets approved officially. Developer is OK, as you have to down say 200k on a 2 million baht house (10%) and he can sell to someone else if it all goes south. The bank is also fine too as it hasn't approved anything until the house is finished. You, as a buyer, are exposed for the 200k deposit, OK, not too much but you seem to be the only one exposed.
All banks operate differently, and again different for Thai-Farang applicants compared with Thai-Thai applicants, but I know banks will give a mortgage structured so that they fund the building works as the house go up. You would have already had to pay your 20-30% deposit, or whatever, and bank would no doubt want a charge over the land title already, although I've never seen the full details. But BKK Thais come to HH and buy places with just 15% down, and bank finances rest for them.
But if arrangement is as you've laid out, you would be getting an ideal set-up I'd say, with the exception of the part about bank not firming up their offer until house is complete, that would worry me.

SJ
Re: The banks MO in LOS when you want a mortgage
I'll have to check that SJ, not sure actually.
No real experience with this. Don't know if there is a catch somewhere, that really the point of the post, let people pick it apart.
Would you say there could be regional variations at work? Is it a way to get ahead in the market and do some business for the developer as there are not so many people with the money to buy new house at the moment and the close future?
Absolutely no staged payments in the way most would expect, 200k down, builds the house, bank comes round and surveys etc, then approves and pays the developer, you then are in with dealing with the bank.
Edit - When I said I'd check on that, was talking about your first point about the chanote/deeds. The rest is pretty much as the developer's sales department has told us.
No real experience with this. Don't know if there is a catch somewhere, that really the point of the post, let people pick it apart.
Would you say there could be regional variations at work? Is it a way to get ahead in the market and do some business for the developer as there are not so many people with the money to buy new house at the moment and the close future?
Absolutely no staged payments in the way most would expect, 200k down, builds the house, bank comes round and surveys etc, then approves and pays the developer, you then are in with dealing with the bank.
Edit - When I said I'd check on that, was talking about your first point about the chanote/deeds. The rest is pretty much as the developer's sales department has told us.
Resolve dissolves in alcohol
Re: The banks MO in LOS when you want a mortgage
Farangs can't get a mortgage for a house as far as I know if it's lease hold. If a Thai wife then that's different but I know it's possible to get a mortgage on a condo.
Re: The banks MO in LOS when you want a mortgage
Yes thats the point I could not understand, great if you do as the risk then becomes equal, but I would be most surprised.Super Joe wrote:reads like you're saying it get put in buyers name, which would be rare imo for something as small as 200k, if paying the full land value then yes, otherwise massive risk to developer
Even if the Bank or agreed 3rd party holds the un-transfered deed I'm sure a Thai could just get a replacement from the land office so rendering it useless as a form of security.
Re: The banks MO in LOS when you want a mortgage
Not some much regional Spit, more like one end of HH High Street will be polar oppposite to the other endSpitfire wrote:Would you say there could be regional variations at work? Is it a way to get ahead in the market and do some business for the developer as there are not so many people with the money to buy new house at the moment and the close future?
Absolutely no staged payments in the way most would expect, 200k down, builds the house, bank comes round and surveys etc, then approves and pays the developer, you then are in with dealing with the bank.

Sounds like your developer is a prominent local, with a pal in the bank to help facilitate, and is offering these financing deals (as in financing the build, rather than mortgage), to corner the market. Very hard for others to compete, fair play to him. If you get to the end and your exposure's been no more than 200k, which lets face it, is a long weekend in Bangkok, then you've done well

Good luck mate,

SJ
Re: The banks MO in LOS when you want a mortgage
You may well be right there SJ. It appears that the developer is in a position to assist people as he sees benevolently fit and we have apparently have been cleared with SCB for 80% with the bank people that work in conjunction with the developer, so he(the developer) acts as the judge in the case after the bank girl has said her piece guaranteeing a certain %, relating to the bank already saying they will give so-an-so %.
They appear to be in cohorts together, which is good for me and for them really.

They appear to be in cohorts together, which is good for me and for them really.

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Re: The banks MO in LOS when you want a mortgage
I think this is often true. When we casually looked around last trip at a few new developments the sales people naturally wanted us to buy. I told them that I'm self employed and the large payments just aren't in the cards right now. I had a couple ask me to put a offer together and maybe they can get something worked out with extended payments.Spitfire wrote:You may well be right there SJ. It appears that the developer is in a position to assist people as he sees benevolently fit
We never pursued since we are just starting to look.

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Re: The banks MO in LOS when you want a mortgage
Hi SJ and others, checked it out to provide an epilogue to this thread.
It appears that this developer has an arrangement with the bank that when you apply, where I am at least anyhow, that after submitting your papers/details etc to the bank, the bank makes an initial offer/% to you but guarantees to the developer that they will definitely give you at least that initial offer. The developer then decides whether or not to build for you/approve. They both have worked together for a long time and obviously have some kind of agreement with each other.
The choice we have, as customers, is that we accept the initial offering from the bank and go ahead, let the developer build and then the bank inspects it when built, then pays, plus we then pay the difference of the full price and the % offering from the bank, whatever % it is in reality.
Or......you have the choice of paying the deposit plus initial stuff and then applying to the bank again 2 months before it's finished with the possibility of getting a greater % from the bank as I've heard that some banks give greater deals if the house is finished, or close to, as opposed to if you just go to the bank with the blue prints. However, you don't forefit the intial offering % guarartee.
I've also come across the fact that the banks will only give a mortgage for as many years as the applicant is away from 60, so if you are 40 then they will only give you 20 years.
So, the worst that can happen is that you get the initial offer from the bank, otherwise the developer would not start the build. So, yes, slightly benevolent on the part of the developer or he's just 'in bed' with the bank getting some crazy deal, which would'nt surprise me as it the 12th estate they are doing.
I think they transfere the land when the bank pays man, sorry for the ambiguity over that one, still new to Thai game on property.
Edit - Perhaps you're right SJ, the benevolence comes from the developer trying to increase sales and do something different to get ahead in business. Wouldn't know myself, but maybe. However, other posters would know more about this than me.

It appears that this developer has an arrangement with the bank that when you apply, where I am at least anyhow, that after submitting your papers/details etc to the bank, the bank makes an initial offer/% to you but guarantees to the developer that they will definitely give you at least that initial offer. The developer then decides whether or not to build for you/approve. They both have worked together for a long time and obviously have some kind of agreement with each other.
The choice we have, as customers, is that we accept the initial offering from the bank and go ahead, let the developer build and then the bank inspects it when built, then pays, plus we then pay the difference of the full price and the % offering from the bank, whatever % it is in reality.
Or......you have the choice of paying the deposit plus initial stuff and then applying to the bank again 2 months before it's finished with the possibility of getting a greater % from the bank as I've heard that some banks give greater deals if the house is finished, or close to, as opposed to if you just go to the bank with the blue prints. However, you don't forefit the intial offering % guarartee.
I've also come across the fact that the banks will only give a mortgage for as many years as the applicant is away from 60, so if you are 40 then they will only give you 20 years.
So, the worst that can happen is that you get the initial offer from the bank, otherwise the developer would not start the build. So, yes, slightly benevolent on the part of the developer or he's just 'in bed' with the bank getting some crazy deal, which would'nt surprise me as it the 12th estate they are doing.
I think they transfere the land when the bank pays man, sorry for the ambiguity over that one, still new to Thai game on property.

Edit - Perhaps you're right SJ, the benevolence comes from the developer trying to increase sales and do something different to get ahead in business. Wouldn't know myself, but maybe. However, other posters would know more about this than me.

Resolve dissolves in alcohol
Re: The banks MO in LOS when you want a mortgage
One of the drawbacks to purchasing was financing in Thailand.
We got lucky...I guess. Or maybe it was good negotiating.
We put down 30% and got financing from the builder. At a very low interest rate.
We got lucky...I guess. Or maybe it was good negotiating.

We put down 30% and got financing from the builder. At a very low interest rate.
