How to Apply for a 100% Home Loan
Everyone has their own dream home. The way to get closer to that goal is by applying for a home loan.
Home loans may seem like a large debt, but they come with low interest rates and longer repayment periods compared to other types of loans. Many people want to secure a home loan for the full 100% to avoid spending any of their own money.
But how feasible is it to get a loan for the full amount? Let's find out with Rabbit Finance.
What types of homes can qualify for a 100% home loan?
The Bank of Thailand has issued guidelines for regulating home loans from commercial banks (Loan to Value) and has set appropriate LTV ratios for lending in three cases:
1. Home loans for properties priced at 10 million baht and above
The LTV ratio is set at 80%, meaning a down payment of at least 20% of the collateral value is required.
2. High-rise residential loans priced below 10 million baht (condominiums)
The LTV ratio is set at 90%, requiring a down payment of at least 10% of the collateral value.
3. Low-rise residential loans priced below 10 million baht (single houses, twin houses, townhouses)
The LTV ratio is set at 95%, requiring a down payment of at least 5% of the collateral value.
According to the central bank's guidelines, there are no cases where you can borrow the full 100% to buy a house.
However, these standards do not strictly require commercial banks to follow them, meaning there are still many banks that allow you to apply for a 100% home loan.
What are the conditions to secure a 100% home loan?
The 100% loan amount refers to the appraised value of the property. For example, if you buy a house for 8 million baht but it is appraised at 7.5 million baht, you will only receive a loan amount of 7.5 million baht.
The conditions to qualify for a full 100% home loan generally include:
Must be a new home supported by the bank
To secure a full 100% loan, banks may require that the property be a new home or part of a new project, purchased directly from the project owner, to apply successfully and receive the desired loan amount.
These projects often have specific agreements with certain banks. Therefore, if you know which bank your desired project has a contract with, you should apply for a loan with that bank.
Borrower's financial capability
To secure a high loan amount, a crucial factor is the borrower's ability to repay debts. The appropriate repayment installment should not exceed 40% of the borrower's income.
This means that even if you find a house that meets the first condition, if your income is insufficient to cover a 100% loan installment or if you have too many other debts, the bank will not approve a 100% loan for you, or you may receive a lower loan amount.
If you don't meet the criteria but still want a 100% home loan, are there other options?
Even if your dream home or income does not meet the criteria for a full 100% loan, there are still other ways to help you secure a higher loan amount.
Co-borrowing
Co-borrowing means having someone else help pay the mortgage, which increases your perceived ability to repay debts in the eyes of the bank and may allow you to secure a higher loan amount.
Taking out a personal loan
If the house you want does not meet the above criteria, you can apply for a personal loan to cover the remaining amount.
However, remember that personal loan interest rates are higher than home loan rates, which means you will have to manage two debt repayments. Therefore, we do not recommend this method unless necessary.
Splitting the loan into two parts: a home loan and a home improvement loan
This means separating the loan amount into two accounts. For example, the first part could be a loan for 80-90% of the home purchase, and the second part could be a home improvement loan for 10-20%. This way, you can achieve a full 100% loan amount.
However, this also means you will have an increased financial burden with two repayments, so be sure to assess your ability to manage this.
No matter how much you apply for a home loan, the most important thing is to remember to make your mortgage payments. Otherwise, your dream home could disappear in an instant. Don't say Rabbit Finance didn't warn you!
Thank you for the information from rabbitfinance.com
