Guidelines for Housing Loans Accessibility for Self-employed Persons Living in Bangkok Metropolitan Area

Abstract

Self-employed persons often encounter difficulties in accessing mortgage loans due to their unstable income and unclear income sources. This research aims to study the mortgage loan considerations used by financial institutions for self-employed persons, along with the self-employed social characteristics and economic backgrounds, the level of mortgage loans knowledge, and the barriers they face in obtaining loans, in order to propose appropriate guidelines for self-employed persons to access mortgages. Data for the study was collected through a questionnaire survey involving 400 self-employed persons in Bangkok metropolitan areas and interviews with mortgage experts from six financial institutions.

            The study found that financial institutions use similar criteria for considering loans to self-employed persons and fixed-income persons, yet different income calculation methods, considering only 50% of net income accounted for base income for self-employed, This makes the ability to repay and credit limits of self-employed persons lower than fixed-income persons. The financial institutions also focus on income evidence and tax payment report consistent with bank account transactions. In the questionnaire survey, 74% were in the age between 20-35 years old, 47% were merchants or entrepreneurs, Researchers divided the respondents into two groups.

First, the persons with no inexperience in applying for housing loan, accounted for 65% of the total respondents. The people in this group mostly have incomes between 10,000-20,000 baht, and  personal expenses below 10,000 baht, They are often facing obstacles due to lack of document preparation and inconsistent income. Second, the persons with experience in mortgage application accounted for 35% of the total respondents, The people in this group mostly have incomes between 30,000-50,000 baht and personal expenses between 10,000-20,000 baht, The results of loan applications reveal that 70% of them were approved because they had prepared proper documents and regularly deposited income into their bank accounts. However, 27% of them were denied due to insufficient income and lack of required documents.

The research indicates that in order to increase opportunities for accessing housing loans, applicants should be financially prepared, with debt burden of less than one-third of their income, down payment at least 20% of the house price and suitable house prices for their income. Additionally, they should be supported with knowledge in financial planning and document preparation. This will be beneficial guidance for interested persons to prepare themselves before applying for a housing loan and for financial institutions to design housing sales support products suitable for self-employed persons.