Buying your first-home is one of the biggest milestones, both in life and in regard to your finances as a homebuyer can do. It's a big commitment, and there's a good chance this will be the largest purchase you've made to date as a homebuyer. This article will guide you as homebuyers through the process of purchasing Thailand real estate focusing on the key takeaways from market research to ensure a smooth and successful experience for for your first-home.
We are going to give first-time homebuyers of why to choose Thailand as your destination for first-time investing of real estate in 2023.
Table of Contents
Determine Whether You Are Ready to Buy a Home
Before diving into the Thailand real estate market, it's crucial to evaluate your readiness for homeownership. Owning a home comes with added responsibilities and costs, such as home repairs, utility bills, taxes, and insurance. To ensure financial stability, first-time homebuyers should establish an emergency fund and reduce any outstanding debts. You know your budget and are you ready to afford the down payment. As a homebuyer you have to be certain that this is budget you have ready. This is the property you are going to purchase. As to purchase a home is not a decision you should ever take lightly.
The responsibility of managing a home, talking with banks and going through the psychological feeling for the money you are going to spend. Your mind, heart and logical reasoning have to be align together.
- Establish an emergency fund and pay off debt before applying for a mortgage. Have no other debts, such as no credit card debts, no student loan debts, or even debts with your mates. Have a clear state with the banks and even in personal life on the process of you purchasing your first-home.
- Assess your financial stability and only proceed with homeownership when truly ready. Know your financial status. Have a monthly budget, and understand how you are going to allocate your funds and money. Find ways for having a passive income through stock exchange or even through REIT via mutual funds.
Start Shopping for a Loan
To finance your Thailand real estate purchase, you'll likely need a mortgage loan. It's beneficial to get pre approved for a mortgage before house hunting, as this will provide an idea of how much you can afford. You can also consider working with a mortgage broker to gain access to a variety of loan companies and programs.
Understanding the current interest rate of a mortgage by the current economic situations is important. As currently in Thailand, the Bank of Thailand is considering to raise rates by another quarter point. As currently the latest rise in interest rate was last year towards the end of third quarter. Currently the interest rates in Thailand is set at 1.25%. With Bangkok Bank the first national bank to rise it's interest rates. It is vital to understand the current interest rates with and how it can effect your first-home purchase in Thailand to apply for a home mortgage.
Find Best Payment Options and Loan Types
Understanding different loan types and payment options is essential for first-time homebuyers in the Thailand real estate market. This includes evaluating fixed-rate and adjustable-rate mortgages (ARMs) and deciding whether a shorter or longer loan term best suits your needs.
What is Adjustable-Rate Mortgage
An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The interest rate is usually fixed for a certain period of time and then adjusts periodically based on an index that reflects current market rates.
There are different types of loans for first-time homebuyers. Here are some of them:
- Conventional loans
- Jumbo loans
- Government loans
- Fixed-rate mortgages
- Research loan types and payment options for your Thailand real estate purchase. Such as if banks are offering you as a first-time buyer a fix-rate or offering adjustable rate. You would have to understand the meaning of it.
- Consider both fixed-rate and adjustable-rate mortgages.
- Weigh the pros and cons of shorter and longer loan terms.
Have Your Down Payment Ready
Preparing a down payment for your Thailand real estate purchase can reduce your mortgage and overall costs. Aim for a down payment of at least 20% to avoid private mortgage insurance (PMI) fees. Be cautious when considering creative financing options, as these may lead to financial difficulties in the long run.
Once you know and is sure to purchase this property unit. You can use various mortgage calculators to check for down payments for the property. With the mortgage calculator you can adjust the interest rate percentage to one you received from the banks. Before making a purchase calculate your down payment with interest rate percentages. To find your monthly payment for you first-home.
Additionally you are purchasing your first Thailand property is for investments purposes. You should calculate the annual rental yield of a property to a rough percentage of your rental yield. You are investing for long-term and passive profitability with real estate. You would want a healthy annual return of investments. Check our real estate calculators here.
Be Honest About What You Can Afford
When exploring the Thailand real estate market, it's crucial to determine a budget based on your income and existing debts. Stick to a budget that allocates between 25% and 30% of your income for mortgage payments, taxes, and insurance.
Schedule Your Home Viewing
Before finalizing your Thailand real estate purchase, invest in a thorough home inspection to identify any hidden issues. This can save you thousands in potential repair costs and may even allow for further price negotiations. As during post sales purposes, before you get your title deed and start paying the bank your monthly mortgage.
Property developer let you homebuyers inspect your home for any damages. All damages recorded from the home inspection get fixes without charge by property developers. From small minor details of your windows not closing till your balcony is wet because of the rain. You can fix everything and anything. You can even request them to fix the issue more than once. If it is not up to your own standard.
Move In To Your Home
Once the closing date arrives, sign the final papers, and prepare to move into your new Thailand property. After months of research, months of leg work, months of stress and pulling your hair. Trying to understand the laws, your own financial stability. And finally you saying ready and taking the step is over. The hard work is done. Now it is time to move towards your next chapter in life.
Plus, be sure to update your address with relevant institutions and set up utilities for a smooth transition.
Why Do I Choose Thailand?
The real estate industry in Thailand is one of the most important industries in the country. In 2020, the GDP contribution of the real estate industry in Thailand amounted to almost 427 billion Thai baht1. This contribution has been growing in the past decade. The house price index in Thailand also remains stable at around 157 points. Which is a sign that external economical factors does not contribute to the steady growth of Thailand real estate market since 2012 till present day.
- Good investment opportunities
- Hassle-free investment with rental management programs
- Thailand is the ideal place to live
Purchasing Thailand real estate as a first-time homebuyer is an exciting yet overwhelming experience. Once you have received the key to your own home. It is an indescribable feeling that nothing can match it. It is only you who understands the feeling with your heart pumping with excitement.