3 simple important things before loaning for building house

Created : 7 Apr 2023

Updated : 8 Apr 2023

Housing Loan

"Home loans" are often understood as borrowing money from a bank to buy a house. While this is not entirely wrong, there's more to it. In reality, we can also apply for a home loan to build a house on our own land. If we already own the land, we can even borrow up to 100% of the construction cost. This means we don't have to pay anything for the construction of the house. It's a very interesting option. Let's learn more about it.

1."Having only land can also be used as collateral to get a home construction loan."

If you have land and want to borrow money specifically for the construction of a house, it is possible to do so. The bank will consider the loan amount by evaluating the value of the house from the house construction plan, also known as the "green print," and the assessed value of the land together. The loan amount provided will not exceed 100% of the cost of building the house (as per the contract) and not exceed 90% of the appraised value of the land and house combined.

Regarding the provision of home construction loans, the bank does not disburse the entire amount at once. Instead, the borrower will receive the money in installments based on the progress of the construction work specified in the loan agreement. The interest will be calculated gradually based on the amount of loan disbursement.
For example, in installment 1, the borrower may receive 200,000 baht upon completion of the floor plan and foundation. Then, installment 2 may be released as 300,000 baht when the structural frame and flooring are completed. At each installment, the bank will evaluate whether the actual construction progress meets the conditions specified in the loan agreement.

2.Required Documents for Applying for a Loan

When applying for a home construction loan with a bank, in addition to preparing personal identification documents such as ID card and house registration, and income-related documents such as salary slips, income certificates, and bank statements, we also need to prepare other documents related to construction, such as:

1.House construction plan and construction permit

2.Land ownership document and land deed

3.Building contractor's license and company registration document

4.Construction agreement and contract

5.Building material cost estimate and project cost breakdown

6.Inspection and quality control plan

7.Insurance policy for construction and property insurance

3. Preparation expenses

The costs associated with building a house:
The cost of designing a house, if using an architect for the design, will depend on the agreement. It could be calculated as a percentage of the construction cost, such as 5% of the construction cost, or a fixed fee could be charged, such as 50,000 baht for the design.

Expenses related to loan application:

Survey and appraisal fees, which are typically around 3,000 baht.
Stamp duty for loan agreement, which is 0.05% of the loan amount (up to a maximum of 10,000 baht).
Mortgage fees, which are 1% of the loan amount. The collateral for the mortgage is not only the house, but also the land on which the house will be built.
Fire insurance premium, which depends on various factors such as insurance coverage, property value, and coverage period.

To summarize, we can have our dream home by having these three things.

1.Land

If you already own the land, you can get a loan of up to 100% of the house construction cost, and up to 90% of the appraised value of the land with the house.
If you purchase land with a house to be built, you can get a loan of up to 90% of the total purchase price including the cost of building the house, and up to 90% of the appraised value of the land with the house.

2.Loan application documents

Land title deed (Chanote) in green color
Building permit and contract for hiring a contractor.

3.Expenses (or costs)

Construction costs, such as design fees
Loan application expenses, such as survey and appraisal fees, stamp duty, mortgage fees, and fire insurance premiums.

If you are still unsure about what type of house to build because you're not certain how much money you can borrow for a home loan, it's best to consult with a bank officer for an initial assessment of your borrowing capacity. You can also get additional information by consulting with a bank near you.

And if you're looking for a beautiful plot of land on Koh Samui to build your dream home, The Property Center offers a wide selection of gorgeous properties. Check out their beautiful listings at this link:https://www.thepropertycenter.asia/search-

Thank you information from : https://www.kasikornbank.com/th/kexpert/knowledge/articles/loan/Pages/Home_A059.aspx?fbclid=IwAR2ui2W_nOFGeuDwmNGr2Ilo7nJQKVDMkosZUi0tSdYeVCV35HSg1HzVCNM

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