7 Steps to Getting a Loan for a Used Home

What are the essential steps for first-time housebuyers in the process of obtaining a second-hand house loan? Buying a second-hand house is a great opportunity for those interested in finding a new house but have a limited budget or want to save money. Second-hand houses are often cheaper than new houses, and some are even already furnished. Today, Kasikorn Bank has compiled 7 easy-to-understand steps for obtaining a second-hand house loan. Let's take a look!

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1. Choose a second-hand house project that interests you.

Start by choosing a second-hand house project that interests you. It's recommended to define the type and details you want when buying a second-hand house, based on these factors:

• Location and environment: This is an important factor. Choosing a good location with convenient transportation, such as being near a BTS station or shopping malls, will increase the potential for growth in the residential area.
• Condition of the land and the house: Once you've chosen a location, check the condition of the land, surrounding buildings, and interior decoration to ensure they are in good condition.
• Consider looking for houses that have been previously rented out: houses that have been previously rented out are often attractive locations because the previous tenants mean the location may be useful for business development or for house renovations. Then you might be able to resell it for profit in the future.
• Choose a house with various conditions or offers. Buying a house is a relatively high expense, so many people choose to take out a loan rather than pay cash. Buyers can apply for a second-hand house loan from a bank. However, carefully check the details, interest rates, and repayment period before deciding to apply for a loan.
• Choose a second-hand house that is a bank-owned property. Houses that are bank-owned, whether they are non-performing assets (NPA) or properties listed for sale, have the advantage of being highly reliable, offering a wide variety of options, often having been pre-screened for good locations, and allowing for verifiable ownership. They also often have many promotions. Applying for a loan may also have more favorable interest rates for buyers, increasing the chances of loan approval.

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2. Contact Financial Institutions

After choosing a project or location you like, contact a bank to apply for a second-hand house loan. Before applying for a second-hand house loan, it is recommended to inquire about the details and conditions of each bank, then compare the advantages and disadvantages, calculate the loan amount, and interest rates to determine which bank offers the best value.

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3. Prepare the Documents

Once you have contacted the financial institution, Please prepare the following documents for applying for a second-hand house loan with Kasikorn Bank:

• Loan application form
• Consent form fully completed by the borrower and co-borrower
• Identity verification documents:
o Copy of the borrower's or co-borrower's national ID card or government employee ID card
o Copy of spouse's national ID card (if applicable)
o Copy of marriage certificate or marriage status confirmation letter for both the borrower and co-borrower (if applicable)
o Copy of house registration certificate (all pages required)
o Copy of house registration certificate and birth certificate of children (if applicable)
o Name change certificate (if applicable)
• Income verification documents:
o Salary certificate within the last 3 months or the latest 1-month payslip
o Bonus notification (if applicable)
o Bank statement for at least 6 months
• Collateral verification documents:
o Copy of land title deed (Nor Sor 3 / Nor Sor 3 Kor) or other title deed with complete registration index
• Documents to be submitted as collateral To purchase a non-performing asset (NPA) from the bank, you will need the following documents:
o Application form for purchasing the non-performing asset and offer to purchase the non-performing asset.
o Proof of deposit for the asset at the value determined by the bank.
o If there are any repairs or additions to the house, please attach the construction cost estimate and the building permit.

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4. Making a Purchase and Sale Agreement

After preparing all the documents, the next step is to make a contract for the purchase and sale of the house and land. This requires a written land purchase and sale agreement (Form 13). Let's look at the important details that must be included in the purchase and sale agreement.

• Contract Duration: The contract must clearly specify the contract duration, including the date of property transfer.
• Contract Details: The contract must accurately state the details of both the buyer and seller, including their ages, addresses, and names. Spaces for the signatures of both parties and witnesses must be included at the bottom of the contract to confirm their understanding of the contract.
• Asset Details: The contract must clearly state the title deed number, land size, building number, and the correct address of the asset.
• Registration and Transfer of Ownership Details: This includes details of all expenses related to the transfer of ownership, such as fees, withholding taxes, and mortgage registration fees. It must also specify the date of land handover and the date of property transfer.
• Breach of Contract Details: This must specify the conditions and details of any breach of contract, along with the responsibilities of the breaching party.
• Other Agreements and Details: The contract must specify exceptions and conditions, such as penalties for breach of contract or cancellation by either party, deposit refund conditions, house warranty, etc.

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5. Deposit of Purchase Agreement

Generally, installment payments are not possible for second-hand houses. Buyers must place a deposit as agreed upon with the seller. This deposit secures the buyer's right to reserve the property. Therefore, buyers should have reserve funds to pay a security deposit of approximately 5-20% of the house price on the day of the property transfer.

For those who are taking out a loan to buy a second-hand house from a bank, or buying a house that is bank-owned, they must also check the details of the interest rate, additional fees, as well as the terms and conditions and policies of the bank.

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6. Inspect the condition of the second-hand house before the transfer

When buying a second-hand house, it is necessary to thoroughly inspect the house before the transfer. It is recommended to start by inspecting the house structure, the land and surrounding structures, plumbing, electrical work, and any cracks or damage in the walls and ceilings to ensure they are in acceptable condition.

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7. Schedule the property transfer at the Land Office

Schedule the property transfer at the Land Office. Once the buyer and seller have agreed on the purchase price, they must agree on a date for the property transfer at the Land Office in their respective district. The process is as follows:

• Contact the officer to receive a queue number and wait for the property transfer.
• Both the buyer and seller sign the documents in front of the officer.
• The officer will summarize the costs, transfer fees, and property appraisal fees, and instruct you to make the payment.
• Once payment is completed, the transfer process is complete. You will receive a yellow and a blue receipt. Make a photocopy of the blue receipt and submit it to the officer.
• The officer will print the endorsement on the title deed. Please check its accuracy.
• The officer will hand over the title deed along with the sales contract (Tor.D.13) to the transferee. *In the case of a house loan, the bank will keep the original title deed, and the bank will remain the owner until the buyer has fully repaid the loan.*
The transfer fees are as follows:

o Transfer fee: 2% of the appraised value. For example, if the appraised value is 2,000,000 baht, the transfer fee will be 2% of the appraised value of 2,000,000 baht, which is 40,000 baht (depending on the contract details regarding who will pay or if it will be split equally).
o Mortgage registration fee: For those who applied for a house loan. A mortgage registration fee of 1% of the mortgage price must be paid, but not exceeding 200,000 baht. For example, if you buy a house for 2,000,000 baht, you will have to pay a 1% mortgage registration fee, which is 20,000 baht (normally, the buyer is responsible for this expense). If it is a cash purchase, there is no mortgage registration fee.
o Income tax withheld at source according to the regulations of the Revenue Department. In the case of an individual seller, tax must be paid because it is considered income from the sale. The tax will be calculated using a progressive or tiered rate (normally, the seller is responsible for paying this amount as it is considered income, but this depends on the sales agreement between the parties).
o Stamp duty (seller's expense) is calculated at a rate of 0.5% of the selling price of the house or the appraised value from the Land Office (using the higher rate). If the seller has not paid the specific business tax, they will have to pay stamp duty.
o Specific business tax (seller's expense) is calculated at 3.3% of the selling price or the appraised value from the Land Office. (Using the higher rate calculation criterion) Typically, the seller must have occupied the house for a period not exceeding 5 years. If they have occupied it for more than 5 years, or their name has been on the house registration for more than 1 year, they are exempt from the specific business fee but must pay stamp duty instead.

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Thank you for the helpful information from K-Property.