Loan application fees

Applying for a home loan involves several costs, which vary depending on the financial institution. There are six main loan application fees:

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1. Loan Application Fee

This refers to the loan analysis fee or loan processing fee charged by each bank and financial institution. The rate varies, but is usually a fixed rate or a percentage of the loan amount, typically 0-1% of the loan amount.

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2. Collateral Appraisal Fee

This refers to the real estate (house, townhouse, land, condo, or apartment) purchased and mortgaged to the bank or financial institution. An appraisal fee is required to assess the property's value as collateral for the loan and to determine the loan amount. The appraisal price may not be the actual market price; it could be higher or lower. The bank or financial institution uses this value as a basis for determining the loan amount based on their established criteria.

The appraisal fee usually depends on the property's value and the loan amount requested. If the collateral or loan amount is high, the appraisal fee will also be high, according to the criteria set by each bank or financial institution. The appraisal fee alone averages around 1,500-2,500 baht, or according to the criteria set by each bank and financial institution, which will vary.

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3. Land Office Mortgage Registration Fee

The buyer must prepare for this expense to pay the mortgage registration fee, which is 1% of the loan amount or the mortgage value, but not exceeding 200,000 baht. This expense must be paid to the Land Department.

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4. Fire Insurance

This is a mandatory expense, as banks usually require all properties for which loans are taken out to have fire insurance, with the benefit going to the bank, to mitigate the risk in case of fire. Approximately 2,000 baht for a house valued at 1 million baht. This must be paid to the lender. In addition, some banks may require borrowers to also take out life insurance for the residence. The main principle is that the insured person will be covered in case of death or disability during the insurance period by the insurance company. The remaining loan balance will be repaid to the bank on behalf of the borrower, transferring ownership to the borrower or their heirs.

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5. Stamp Duty

This is payable at a rate of 0.05% of the loan amount or 1 baht for every 2,000 baht of the loan amount, but not exceeding 10,000 baht.

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6. Prepayment Penalty

This refers to the fee charged by the bank or financial institution to the borrower in the event of early redemption of the mortgage, especially if the entire debt is repaid and the mortgage is released within the first 3 years of the loan. The rate charged varies among banks and financial institutions.

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