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Sep. 11, 2006 - Bangkok Bank offering mortgages to foreigners

Available only at bank’s Singapore branch, the facility is structured as a long-term leasing-loan contract with a 30-year limit

Mortgage loans for buying residential property in Thailand are available to foreigners at Bangkok Bank (BBL)’s Singapore branch. Expatriates in Thailand are now offered mortgage loans by Bangkok Bank, but they have to go to the Singapore branch and be prepared for some currency exchange. The bank finances leasehold landed property in Thailand for both detached houses and condominiums. But the loan contract is different from one for a normal mortgage offered by a commercial bank to local customers.

Bangkok Bank’s mortgage for expatriates is, in fact, a long-term leasing-loan contract with a maximum maturity of 30 years. The bank has to set this special condition because, according to Bank of Thailand regulations, Thai commercial banks are not allowed to grant loans directly to foreigners. Bangkok Bank’s Singapore branch offers mortgage loans to foreign customers in two currencies, the Singapore dollar and the US dollar. The bank will convert the Singapore dollar and the US dollar into baht to pay for the residential property to land-developers in Thailand. The quantum available is up to 70 per cent of the lease price. The bank provides a maximum loan amount of S$1 million or an equivalent amount and a minimum of S$100,000. The bank stipulates an interest rate charged at prime lending rate, which stands at 6 per cent currently for loans in the Singapore dollar, while customers dealing in the US dollar are charged at US prime rate, currently also 6 per cent, plus 0.5 per cent a year.

The bank takes a loan-processing fee of S$5,000 or an equivalent amount, payable upon acceptance of the bank’s offer, and S$2,000 is refunded once a customer takes the loan. All allied expenses, ie legal costs, asset-appraisal fees and fire-insurance premiums, are the borrower’s responsibility. Loan repayment, of principal as well as interest, is scheduled by monthly instalments and commences one month from the date of disbursement. The bank allows borrowers to pay back ahead of maturity, but they are then subjected to a payment of 1.5 per cent flat on the loan.

Customers can draw the loans only upon payment of the difference between the lease price and the loan amount, subject to completion of loan documents and fulfilment of all conditions. According to the bank, applicants have to submit the following documents:

1) Copy of identification card or passport ;

2) Last two years’ income-tax returns;

3) Last two years’ balance sheet and profit-and-loss statement for self-employed borrower;

4) Lease agreement;

5) Employer’s letter addressed to Bangkok Bank (Singapore) confirming position, years of service and remuneration;

6) Bank’s letter of reference addressed to Bangkok Bank (Singapore), confirming banking relationship, conduct or type of account and size of loan or deposit with the bank;

7) Last six months’ bank statements.

Kasikornbank’s Los Angeles branch services mortgage loans in baht to Thais living in the US. The documents required are an identity card and a census record. An applicant must have a proxy borrower who lives in Thailand.

The loan approval procedure at the LA branch is similar to the one at the bank’s headquarters in Thailand. Borrowers are required to deposit cash as a monthly instalment in their deposit accounts in Thailand. The bank recommends borrowers transfer this to Thai deposit accounts once every two or three months in order to save on transfer fees.

In deference to the central bank’s regulation that prohibits direct loans to foreigners in Thailand, Kasikornbank offers loans to expatriates’ Thai wives. The bank requires a financial statement from the husband, and borrowers must show their marriage licences.

--The Nation --
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