Looking to buy a house…..How much money should one be prepared for?
Despite of the fact that we are currently facing a downturn in the world economy, but a house is one of the 4 necessities of life, we all need to have shelter. For a couple thinking of starting a family with funds in hand may straightaway start looking at projects with houses already built or a good second-hand house whose construction predated the enormous hike in the price of material and fuel making such houses affordable price or at a slightly raised price. I really do believe that constructing a new house today or looking to buy one next year you would get a shock to hear the prices quoted.
Naturally, ordinary people who are not born to wealthy families and wishing to buy a house would have to take a loan from a financial institution. Each project will normally have a repayment plan for the duration of the loan period, from say, 15 to 30 years all depending on the amount of down payment and the monthly rate of easy repayment. This is done on a case by case basis to suit the individual buyer. Yet, there are some extra hidden costs which may not be obvious known to home buyers, as, over and above the down payment (some project may state 100% loan is available) we have to be prepared for the extra costs such as mortgage fees, duty, bank’s commission and etc. as follows :
1) First of all, I would like to mention that the bank or your monetary institution would invariably impose the charges on borrowers.
1.1 A one time fee is charged at not over 1% of amount loan of say 1 million, the fee is Bht.10,000.-.
1.2 Assets evaluation costs not over 0.5% of amount of loan. A loan of Bht.1 million the fee is Bht. 5,000.-.
1.3 Fire insurance of a few thousands Baht per year (for a regular house, not a mansion)
1.4 Insurance on loan, the bank usually asks you to take out a life insurance to cover the loan in the event of your demise or met with a severe accident and can no longer earn an income and the insurance will pay for the balance owing on the house. The premium for this is likely to be a few thousand of Baht a year, so taking out a loan for Bht. 1 million you would have to be prepared to pay something in the region of a little over Bht. 20,000.-.
2) The above expenses are those you would have to pay when taking out a loan at a bank or a financial institution. At the conclusion of this stage you will be taken to the local Land Office to register the mortgage, naturally, here you will incur more costs, fees to the government.
2.1 Mortgage fee , not over 1% of the loan amount
2.2 Generally, the charge of a house hand over is 2% and in the case of a second-hand house, the land officer will make the assessment of the value of the property. It should be established beforehand who pays for the transfer you or the seller, and normally it’s 50-50.
2.3 Duty stamp is 0.5% of the loan amount
2.4 Some other minor fees for paper work.
Special Promotion ! : The government has introduced a measure in support of people buying real estate assets and condominium units by having reduced the mortgage and house hand over fees from 1% + 2 % to 0.01% + 0.01% (โดยลดราคาค่าธรรมเนียมการจดจำนองจาก 1% เหลือ 0.01% และค่าโอนจาก 2% เหลือ 0.01% เช่นกัน), effective 3rd March 2008. This has substantially reduced the expenses from about Bht. 30,000.- to about Bht. 200.-
Moreover, in the event of buying a new house from a project developer, a buyer should ask if this price includes the electric meter, water meter and the village communal fee. Some projects require buyers to pay a many years in advance at the same time as the house transfer. As for buying a used house, a new buyer should ask the previous owner to settle all unpaid bills such as water, electric and phone.
All that I have mentioned above is just to get you prepared for some extra costs over and above those mentioned in the brochures and I wish that all of you find the house that you are comfortable with.