Construction Loan: Bangkok Real Estate

Construction Loan: Bangkok Real Estate
Construction Loan: Bangkok Real Estate

A construction loan is a type of short-term loan. Banks provide construction loans.

These loans finance building projects in Bangkok.

Construction loans differ from mortgage loans. Construction loans have shorter terms.

Mortgage loans fund the purchase of completed properties.

Interest-only payments are a popular feature of construction loans. Borrowers pay only interest during construction.

Full repayment begins once construction ends.

Construction loans require detailed project plans. Lenders evaluate these plans before approval.

Detailed budgets are part of the required documentation.

Funds release from construction loans occurs in stages. Money is disbursed as construction milestones are reached.

Inspections confirm milestone completions before disbursement.

Variable rates are a common feature of construction loans. Rates adjust with the market’s prime rate.

This contrasts with fixed-rate mortgage loans.

Lender involvement is higher in construction loans. Lenders monitor project progress closely.

This involvement contrasts with personal loans, where lender involvement is minimal.

Borrowers must secure a mortgage to repay construction loans. This process occurs after the project’s completion.

Repayment contrasts with auto loans, which are repaid in regular installments without securing another loan.

Exclusive to construction loans, borrowers can convert them into mortgages. This conversion happens at project completion.

Such conversions are not applicable in other loan types like personal or auto loans.

Construction loans allow customization of loan terms. Terms can adjust to match project timelines.

Personal loans do not offer this flexibility.

Unique to construction loans, lenders may require a lien on the construction project. This security measure protects the lender’s investment.

Credit cards, another loan type, do not require collateral.

Construction loans provide funds for building projects, whereas other loans like personal or auto loans fund purchases without the direct involvement of the lender in the financed asset. Construction loans’ disbursement based on project milestones, lender involvement, and the potential for loan conversion distinguish them significantly from other loan types.

For more detailed information on real estate financial terminologies, visit our glossary about Bangkok real estate.