Thailand Real Estate 101: First-Home Buyer Guide

Buying your first home is considered one of the biggest milestones, both in life and in regard to your finances. It's a big commitment, and there's a good chance this will be the largest purchase you've made to date. This article will guide first-time homebuyers through the process of purchasing Thailand real estate with Kai Baan Thai, focusing on the key takeaways from market research to ensure a smooth and successful experience.

Determine On You Ready To Buy Your First-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 ready to afford the down payment. As a homebuyer you have to be certain that this is a budget you have ready. This is the property you are going to purchase. As to purchasing 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 aligned together. Once you are determine and understand all the logic and reasoning to purchase your first home. Then you can continue your journey by finding your first-home and property types with Kai Baan Thai.

Key Takeaways

1. 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.
2. 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.

Searching For A Home 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 the 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 mortgage 
   

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 online real estate calculators here.

Be ready to make sacrifice

According to a survey conducted by the National Association of Realtors, first-time homebuyers between the ages of 23-31 and 32-41 often have to make sacrifices in luxury items such as eating out, travel, entertainment, and clothes to afford their first home. The survey found that 70% of first-time homebuyers in both age groups reported cutting back on their expenses in these areas.

• Eating out is a common luxury expense that first-time homebuyers often have to cut back on. The survey found that 58% of first-time homebuyers between the ages of 23-31 and 32-41 reported reducing their spending on dining out. 
• Travel is another luxury item that first-time homebuyers often have to sacrifice and it found that 52% of first-time homebuyers between the ages of 23-31 and 32-41 reported reducing their spending on travel. 
• Entertainment is also a luxury item that first-time homebuyers often have to cut back on. The survey found that 47% of first-time homebuyers between the ages of 23-31 and 32-41 reported reducing their spending on entertainment. 
• Finally, clothes are another luxury item that first-time homebuyers often have to sacrifice. The survey found that 44% of first-time homebuyers between the ages of 23-31 and 32-41 reported reducing their spending on clothes. 

Request a Home Inspection

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 developers let homebuyers inspect your home for any damages. All damages recorded from the home inspection get fixed 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. 

Find a Local Real Estate Agent

A good real estate agent is essential in guiding first-time homebuyers through the Thailand real estate market. Kai Baan Thai can provide expert support throughout the homebuying process, from understanding your needs to negotiating the best deal. Understanding needs for clients, budget and the want of perusing the need to for a first-home is important to us and important to you as a homebuyer. 

Why Choose Thailand Real Estate

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 do not contribute to the steady growth of Thailand real estate market since 2012 till present day. Thailand have popular regions from the big metropolis city of Bangkok, to the mountains of Chiang Mai and of course the crown jewel of Thailand is the white sandy beaches and island lifestyle of Phuket. You are spoil of choices when deciding your first-home to purchase in Thailand. 

1. Good investment opportunities
2. Hassle-free investment with rental management programs
3. Thailand is the ideal place to live

What's Next

Purchasing Thailand real estate as a first-time homebuyer can be an exciting yet overwhelming experience. By following these steps and partnering with Kai Baan Thai, you can navigate the homebuying process with ease and tranquility by knowing that you have a local expert real estate by your side. 

For more information on how to buy your first-home in Thailand, click on the button below to contact us today.

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