Summary of Home Loan Criteria for 2019

Summary of Home Loan Criteria for 2019

              The changes in the financial sector regarding the “New Housing Loan Regulatory Criteria” that will come into effect on April 1, 2019 are expected to help all parties involved in real estate transactions, both developers and consumers, to navigate more smoothly. Additionally, it will enable commercial banks to issue home loans with better quality.

              For those worried that their “dream home” is now out of reach, there is still hope. The new housing loan regulatory criteria focus primarily on two main groups:

1. Borrowers applying for housing loans for their second home onwards, provided they have not yet paid off their first home.
2. Borrowers applying for housing loans valued at 10 million baht or more.

            This means that if your dream home is your first home and priced below 10 million baht, you will not be affected by the new housing loan regulatory criteria at all. Furthermore, the Bank of Thailand has provided additional information regarding groups that will not be affected by this change, categorized into six main groups:

1. First-time home loan applicants with a price below 10 million baht.

2. Those looking to refinance their first home to reduce interest payments (for borrowers with only one mortgage).

 

3. Borrowers applying for a second home loan after fully paying off their first home.

 

4. Borrowers applying for a loan to build a home on their own debt-free land.

 

 

5. Borrowers who have signed a purchase agreement or made a down payment before October 15, 2018.

 

6. Borrowers applying for a home loan before April 1, 2019.

 

              The housing loan regulatory criteria that will take effect on April 1, 2019 will involve two main aspects: the minimum down payment rate and top-up loans, detailed as follows:

 1. Minimum Down Payment Ratio for housing loans is divided into two main groups: below 10 million baht and 10 million baht and above. The details differ, but they will be the same for those applying for a third home loan while still paying off other loans, set at 30%. Details are as follows:

2. Loan Amount will include Top-Up Loans (loans for other purposes secured by the same property, such as personal loans, home improvement loans, etc.) must not exceed 100% of the collateral value, except for loans to pay for life insurance (MRTA), property insurance, and loans provided to SMEs.

3. Implementation Date will be from April 1, 2019, onwards, except for cases where purchase agreements or down payments were made before October 15, 2018.

                This change is believed to benefit the public and related sectors as a whole. For instance, individuals looking to buy for actual residence will be able to purchase homes at more reasonable prices, reducing unnecessary borrowing behavior. At the same time, it will help those looking to buy for investment or speculation to better manage risks. Even developers will benefit from a more accurate analysis of housing demand, reducing the risk of excess supply. ----TerraBKK

Article by: TerraBKK Investment Tips

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