Currency exchange “luck” gods
After making a significant life-changing decision to purchase a property in Thailand, next comes the crucial part of funding the sale. Unfortunately, foreigners (even those with valid work permits) are unable to secure a mortgage from local banks to finance the purchase. Therefore, most property purchasers by foreigners are cash transaction only with supporting incoming overseas funds to finance the sale.
However, in recent times, some financial institutions in Singapore & Thailand have been willing to offer different mortgages of up to 80% of the sales price of the property for properties in Thailand but are largely restricted to foreign freehold condominiums in certain specified locations or projects and do not include landed properties. In spite of this we have been recently advised that certain landed properties have now been included. In a move to promote their developments, some developers have also been known to offer financing packages as high as 50% – 70% of the purchase price over a 5- or 10-year period. This strategy has worked well for developers in achieving sales as well. Due to the limited ability of foreigners to obtain a mortgage in Thailand, overseas funds are usually transferred to facilitate the purchase. But the transfer of foreign funds is a tricky one; depending mostly on the time of transfer and the fluctuating currency exchange rates. The luck of the gods plays a big part here as sometimes, even after closely monitoring the exchange rates, a sudden fluctuation in the exchange rate could result in a difference of quite a substantial amount.
To help minimize the possible currency exchange rate risk, you are able to open a foreign currency deposit in 14 different currencies in Thailand. A foreign currency account can be opened as a savings, a fixed deposit or current account, and can be assessed online to perform online banking transactions like viewing account balances, transfer funds, bill payments etc. This is a convenient and practical way to protect yourself from currency exchange risks. You can transfer any of the 14 currencies stipulated by the bank into your foreign account at any time. When the exchange rates move in your favour, then this can be converted to Thai baht or remitted onwards. The minimum initial deposit to open a foreign currency account is USD $1,000 or the equivalent in any other currency. There are no restrictions for maximum value.
The use of a foreign currency account is recommended for would-be property buyers and sellers and especially recommended for high-end luxury properties where the transaction is of higher value and the currency exchange risks are also higher. Whether the transaction has been agreed in a foreign currency or Thai baht, the use of a foreign currency deposit could help to limit and minimize further transaction costs.