Now is the best time for low-income earners to have their own homes, with the door opened to them by the state-owned GH Bank's flexible housing loans and the government's cuts in transfer and mortgage fees as part of the property stimulus package.
GH Bank is offering a total of 10 billion baht in low-rate mortgages to those who want to buy homes priced 3 million baht or less. Under the scheme, the state-backed housing lender offers mortgages of up to 3 million baht to those with monthly incomes of 30,000 baht. Normally, only those earning 54,000 baht a month are eligible for the 3-million-baht housing loans.
Those earning 10,000 baht a month can borrow up to 1 million baht under the scheme.
Under the loan's conditions designed to ease the monthly mortgage payments of borrowers, they are required to pay a mere 5,000 baht a month in the first year, 5,700 in the second and 7,000 from the third onwards for the 1-million-baht mortgage.
GH Bank charges borrowers 3.5% for the first year, 4.25% for the second and the minimum retail rate (MRR) minus 0.75 percentage points throughout the term of the loan for general borrowers and MRR minus one percentage point for employees of companies that have been offered special conditions by GH Bank. Its MRR currently stands at 6.75%.
Loan applications can be made until Oct 19 next year, or until the 10-billion-baht amount has been fully taken out, whichever is earlier.
Homebuyers can also save tens of thousands of baht from the lower transfer and mortgage fees to 0.01% from 2% of the home value and 1% of the mortgage amount, respectively. For example, under the scheme, buyers are charged only 100 baht as a transfer fee for homes priced 1 million baht and another 100 if they take out a zero-down-payment mortgage. Under the normal rates, they would be subject to a 20,000-baht payment transfer fee and another 10,000-baht mortgage fee, given the same conditions of home price and mortgage loan.
The fee reduction runs through April 19, 2016 and buyers of homes with a price tag of not more than 3 million baht are eligible to enjoy the privileges.
Even though the benefits of the property stimulus measures are restricted to those who have a maximum 3-million-baht purchase, potential homebuyers going over that limit, or those who qualify for housing loans from commercial banks, can shop for better mortgage deals being offered by other lenders.
Besides, they can get more attractive mortgage rates if their potential homes come with a special rate offered by financial institutions.
People check out deals offered by condominium projects at a house and condo fair held in Bangkok recently.Chance for low-income earners to buy a house is opened after the government set out housing home loans to support the purchase.PANUPONG CHANGCHAI
At the moment, Siam Commercial Bank (SCB), the Government Savings Bank (GSB) and Land and Houses Bank (LH Bank) offer better mortgage rates for the first three years than those offered by GH Bank. Borrowers largely consider mortgage packages for the first three years as they are eligible for refinancing with the same lender for lower rates every three years.
SCB, the country's biggest mortgage commercial lender, provides three mortgage packages and all have lower rates than the GH Bank's mortgage under the government's stimulus package, averaging 4.58% a year.
The GH Bank's average rate is calculated from the first three years and based on the bank's current MRR of 6.75%.
SCB's first package is a 0.75% rate for the first year, MRR minus 2.25 percentage points for the second and third years and MRR minus 1.5 percentage points thereafter. Based on SCB's current MRR of 7.87%, it averages almost 4% a year for the first three years.
Its second package is 3.5% for the first two years, MRR minus 2.5 percentage points for the third year and MRR minus 1.5 percentage points thereafter. It averages 4.21% for the first three years.
Officials of the GHB provides details housing loan detail to customers at a House and Condo Show.The bank has offered low-rate mortgages for low-income earners. PHRAKRIT JUNTAWONG
The last package is 4.25% for the first three years and then MRR minus 1.5 percentage points.
GSB, another state-run bank, offers two home mortgage packages. For the first, the bank charges 1.25% for the first year, MRR minus 2 percentage points in the second year, and MRR minus 0.75 percentage points from the third year onwards. The second package charges 4.5% for the first three years and MRR minus 0.75 percentage points from the fourth year onwards.
The first package averages 4.48% and the second 4.5%.
LH Bank's three home mortgage packages have average rates ranging from 4.46% to 4.5% for the first three years. However, these packages require borrowers to buy mortgage reducing term assurance, a protection for house financing in the event of a borrower's premature death or permanent disability.
The small bank charges MRR minus 3.75 percentage points or equally 4.375% per year for the first two years, MRR minus 3.55 percentage points for the third year and MRR minus 2% until maturity. LH Bank's MRR is 8.125%.
It also offers a 4.5% rate for the first three years and MRR minus 2 percentage points thereafter; and 3.5% for the first year, 4.5% for the second year, 5.5% for the third and MRR minus 2 percentage points throughout the term of the loan.
With the interest rate trend turning upward likely late next year, borrowers prefer packages with fixed interest rates to those with floating rates.
For those who choose floating rates, the minimum lending rate (MLR) is lower than the MRR and large lenders normally charge lower rates than smaller banks for the same type of interest rates.
For example, SCB's MRR stands at 7.87%, well below LH Bank's 8.125% and Kiatnakin Bank's 8.5%.
Borrowers should check the MLR and MRR rates of each bank before making a decision.
Last but not least, home financing is a major commitment, even a lifetime one for most homebuyers, so financial discipline is required to prevent them from falling into the debt trap.
