Many people want to buy a home but face loan rejections. Recent reports show home loan rejection rates rising 50-60%, with even higher rates among low-income groups seeking houses priced below one million baht. But what is causing this? Thairath Money explores the reasons.
Home sales have hit their lowest levels in years—not due to lack of desire to own homes, but because many loan applications are denied by banks. The main cause is the economic slowdown, stagnant incomes, and household debt soaring to nearly 90% of GDP. High debt levels mean people may have less ability to repay, prompting banks to worry about loan repayment through the contract term.
Recently, banks have tightened borrower screening, focusing on customers with higher purchasing power and income, believing they can meet repayment obligations. Meanwhile, groups with less stable income face tougher scrutiny, needing to provide complete financial documents to prove repayment capacity. Some cases require larger down payments to reduce loan amounts.
When applying for a loan, banks conduct multiple checks to ensure the borrower exists and earns enough to repay. The key factors include:
Now to the crucial question. Does having a credit card affect loan approval? The answer is "yes." Whether it's a cash advance card or a credit card, having credit limits means you can incur debt. Banks may factor in these limits when calculating your "repayment capacity," which in some cases reduces the amount you can borrow for a home.
Before applying, review your financial health and prepare in three main areas:
1. Assess your financial readiness Calculate your current income and total debts to estimate how much additional monthly payment you can handle for a home loan, helping determine an affordable home price.
Typically, a 1 million baht loan requires monthly payments of about 6,000-7,000 baht. For a 2 million baht home, monthly payments might be around 12,000-14,000 baht. Importantly, consider the long term beyond the first three years when installments are usually lower, as home loans often last decades.
2. Settle small debts and manage credit cards Three to six months before applying, clear small debts and high-interest loans such as personal loans, phone installment debts, or credit card balances. If you have multiple unused credit cards, consider closing some to reassure banks you won't overextend credit in the future.
3. Prepare financial documents To expedite loan processing, contact the housing project to apply for pre-approval to know your loan limit. Also, prepare at least 10-30% of the home's value in cash to cover potential expenses or down payments due when the loan is approved.
Ultimately, the big question remains: which home price can you afford, and how do you choose one that fits your needs?
Read personal finance news and planning with Thairath Money to help you "achieve good finances and a better life."https://www.thairath.co.th/money/personal_finance
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