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  4. Top 6 Tips For Financing Property In Koh Samui

Top 6 Tips for Financing Property in Koh Samui

FazWaz
Written by FazWaz
Niratchaphon Parnchoem
Edited by Niratchaphon Parnchoem
Wacharaporn Laroeng
Reviewed by Wacharaporn Laroeng
Financing Property

 

When buying property in Koh Samui, It's important to become familiar with the financing options available. These may include mortgage loans, leasehold and freehold properties, cash purchases, rent-to-own and joint venture options. And you should understand the specifics of each option and the impact on your long-term financial obligations as well.

6 Tips for Financing Property in Koh Samui

Here are some tips for financing a property in Koh Samui as a foreigner, given the legal restrictions on foreign land ownership in Thailand. While owning land can be challenging, non-Thai nationals can purchase condominium units with certain limitations. To finance the purchase, foreigners can apply for a mortgage from either a Thai or foreign bank.

  • Cash Purchase

Cash purchases can be a desirable option if you have the funds readily available, as it eliminates the need for loan interest payments. Plus, this may improve your negotiating power with the seller. However, it is important to consider if this method will leave you with adequate reserves for unforeseen expenses, property maintenance or other contingencies.

  • Mortgage Loans

Mortgage loans are the most common form of financing for property purchases. These loans are typically offered by banks and other financial institutions and they are secured by the property itself. You usually need to have a high income and a strong credit score to qualify for a mortgage loan. It is also crucial to remember that the requirements and interest rates may differ based on the lender and the property location.

UOB offers a property loan package for those considering purchasing a freehold condo in Thailand as either a residence or investment. One of the significant advantages of this package is that there is no need to hold a work permit or be residing in Thailand. However, certain conditions must be met, such as:

- The principal amount offered is up to 70% of the purchase price.
- The loan currency is available in Singapore Dollars (SGD) or American Dollars (USD).
- The mortgage term/tenor is up to 30 years.
- For non-Thai condominium buyers, the LTV (loan-to-value) ratio ranges from 40% to 80% of the bank's estimated property value.
- It's worth noting that interest rates for this loan package (typically around 6% to 8%) are considerably higher than Thai interest rates.

*note: For example, this project "Aqua Samui Duo" selling price is 11.5M Baht and the loan price (Avg Loan) is 40-80% = 4.6-9.2M Baht

When applying for a mortgage loan to buy a property for sale in Koh Samui, you will need to provide a variety of papers to the lender, such as proof of income, a credit report and a down payment. The down payment is typically a percentage of the purchase price and is required as collateral for the loan. For example, a down payment of 20% may be required to avoid paying private mortgage insurance. 

Social proof is also important when it comes to mortgage loans. Reading reviews and testimonials from other borrowers who have worked with a lender can give you a better idea of their level

  • Property for Sale in Koh Samui

Real estate options in Koh Samui can be obtained through multiple channels such as online portals, agents and classifieds. It's vital to conduct thorough research and weigh the pros and cons before committing to a purchase. Consider variables such as a property's location, size, condition, and growth potential while analyzing it. Consulting a local real estate agent or attorney for guidance on the market and legal procedures is also advisable.

  • Leasehold and Freehold Property

When purchasing property in Koh Samui, you can choose between leasehold or freehold ownership. Leasehold properties are rented for a set period, usually 30 years. On the other hand, freehold properties are owned outright. Leasehold properties are less expensive, but freehold properties provide better security and the freedom to make alterations to the property. Before selecting a choice, weigh the benefits and drawbacks of each.

  • Rent-to-own

Rent-to-own is a potential solution for those looking to reside in a property while gradually acquiring it. This method entails renting the property for a specific duration, during which the tenant has the opportunity to purchase it at a pre-agreed price. This approach provides the tenant with the flexibility to reside in the property while they accumulate funds for a down payment or enhance their creditworthiness.

Rent-to-own can be a viable option for individuals who want to live in a property while paying for it. This arrangement involves renting a property for a certain period, during which the tenant has the option to purchase the property at a pre-agreed price. However, it's important to be mindful that these agreements can be intricate and may have legal stipulations. Consulting a lawyer before signing is recommended to understand the agreement thoroughly.
 

rent to own

  • Joint venture

A joint venture is another way to fund the buying of real estate in Koh Samui, where two or more parties invest and share the gain or loss of the property. This can be a viable option for those who lack the funds to buy alone.
Collaborating with another party through a joint venture can be a way to acquire property in Koh Samui. Pooling resources and expertise can mitigate financial burdens and also provide other benefits. It's vital to have a well-defined agreement that lays out the partnership's terms, including each party's responsibilities, profit and loss allocation and dispute resolution procedures. Additionally, it is important to carefully assess any potential partners to ensure compatibility.

One example of a successful joint venture in Koh Samui is The Ridge, a luxury villa development project that was a partnership between a local developer and an international investor. Together, they were able to create a world-class property that has been a profitable investment for both parties.

However, it's important to note that entering into a joint venture requires a well-defined agreement that outlines each party's responsibilities, profit and loss allocation, and dispute resolution procedures. Additionally, it's crucial to carefully assess potential partners to ensure compatibility and minimize the risk of disagreements down the line.

Conclusion

In summary, there exist multiple methods of financing the acquisition of property in Koh Samui, such as mortgage loans, cash purchases, and rent-to-own. It is vital to thoroughly explore your options before making a choice. Before proceeding, it is advisable to seek advice from financial experts, real estate agents and legal counsel to have a clear understanding of the process and its legal ramifications. Properties for sale in Koh Samui can be sourced from various outlets such as online platforms, real estate agents, and classifieds. With proper research, due diligence, and planning, you can find the perfect property and financing option to make your dream of owning property in Koh Samui a reality.

Having gained a clearer insight into the financing options obtainable for buying property for sale in Koh Samui, you can begin your quest for the ideal property. Our selection of properties for sale in Koh Samui is worth exploring if you are interested in this spot. Additionally, we have an excess of properties available for purchase in other regions of Thailand and our skillful team will guide you through the acquisition process to find the perfect property that fits you.

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