Property Mortgages in Thailand. The concept of mortgaging real estate in Thailand is well-established under the Thai Civil and Commercial Code. A mortgage is a registered security interest over immovable property, including land and buildings, which serves as collateral for a debt. While mortgage mechanisms in Thailand are functionally similar to those in other jurisdictions, several unique legal and procedural elements apply—particularly concerning foreign buyers, title deeds, and banking regulations.
This article aims to provide a detailed overview of the mortgage system in Thailand, with special focus on the legal framework, procedural requirements, institutional lenders, restrictions applicable to foreigners, and practical concerns related to enforcing mortgage rights.
Legal Basis of Mortgages in Thailand
Mortgages in Thailand are governed by Sections 702–746 of the Civil and Commercial Code (CCC). Under Thai law:
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A mortgage must be made in writing and registered at the Land Office to be legally effective.
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The mortgagor (borrower) must be the owner of the property.
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The mortgagee (lender) receives a security interest in the property, not ownership.
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In case of default, the mortgagee must seek judicial enforcement before the property can be sold.
The mortgage agreement generally includes terms about repayment, interest, default events, and lender remedies, but it does not transfer possession or title to the lender.
Eligible Property Types for Mortgages
Not all property types are mortgageable under Thai law. Mortgages may be registered over the following:
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Land with Title Deeds:
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Chanote (Nor Sor 4 Jor): Full ownership title—most desirable for banks.
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Nor Sor 3 Gor and Nor Sor 3: May be accepted but less preferred due to boundary ambiguity.
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Buildings (including Condominiums):
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A separate mortgage can be registered over a building, provided it is correctly registered and has construction permits.
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Condominium Units:
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Must be part of a registered condominium under the Condominium Act B.E. 2522 (1979).
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The title must be freehold, and the unit should have an individual title deed.
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Leasehold Rights:
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Cannot be mortgaged directly. However, leasehold interests may be assigned as collateral under different arrangements.
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Who Can Be a Mortgagor and Mortgagee?
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Thai nationals and Thai legal entities can freely mortgage property.
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Foreigners can be mortgagees (lenders), but with limited rights as mortgagors.
Foreigners as Mortgagors:
Foreigners cannot own land under the Land Code except under specific exceptions (e.g., BOI investment, industrial estate rules, or through leases). As such:
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A foreigner cannot mortgage land they do not own.
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However, foreigners may mortgage condominium units they legally own.
Foreigners as Mortgagees:
Foreign individuals and foreign financial institutions can act as lenders, but they may face hurdles in foreclosure and enforcement unless they hold long-term legal presence in Thailand.
Mortgage Process and Registration
Step 1: Drafting the Mortgage Agreement
The mortgage agreement must clearly define:
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The debt amount
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Interest rate
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Terms and conditions
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Description of the secured property
The agreement must be in Thai language or translated officially for Land Office purposes.
Step 2: Registering the Mortgage
The mortgage must be registered at the Land Department office where the property is located. Key points:
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Both parties must be present or act through authorized attorneys.
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Applicable government fees are 1% of the mortgage amount, capped at THB 200,000.
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Stamp duty of 0.05% may also apply.
The Land Office issues updated title deeds (for land or condos) with the mortgage details annotated.
Mortgage Lending Practices in Thailand
Thai Banks
Thai commercial banks (e.g., Bangkok Bank, Kasikorn Bank, SCB) are the main mortgage lenders for Thai nationals. Standard terms include:
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Loan-to-Value (LTV): Up to 90–100% for first homes, lower for second homes or investment properties.
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Interest Rates: Typically between 5%–7% annually, often with promotional fixed rates in early years.
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Tenor: 10 to 30 years depending on the borrower’s age and income.
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Collateral: Usually the property being purchased; additional guarantors or assets may be required.
Loans to Foreigners
Thai banks rarely offer mortgages to foreign individuals unless they have long-term visas, proof of local income, or permanent residency. A few exceptions exist:
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UOB Thailand: Has offered limited mortgage products for foreigners purchasing condos.
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ICBC Thailand: Some financing options for Chinese nationals.
Most foreigners buying property in Thailand rely on cash purchases, overseas financing, or private lending arrangements.
Risks and Enforcement
Mortgage Default
In case of borrower default, the lender must:
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File a lawsuit in court to obtain a court judgment.
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Apply for a court-ordered public auction of the property.
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Recover the debt from the auction proceeds—any shortfall remains the borrower’s obligation.
This process may take 12–36 months and requires active involvement of legal counsel and enforcement officers.
Priority of Claims
Thailand recognizes the first-to-register principle. Earlier registered mortgages take precedence over later claims. This makes due diligence on existing encumbrances critical.
Other Forms of Secured Lending
In some scenarios where traditional mortgages are not feasible, alternative secured structures are used:
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Pledge of Land Shares (in landholding companies)
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Conditional Sales: Seller retains title until full payment
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Usufruct, Superficies, or Leasehold Rights used as collateral
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Assignment of Rights under a lease or purchase agreement
These structures are more common for foreign buyers seeking financing for land-related interests.
Regulatory Oversight
The Bank of Thailand regulates financial institutions and mortgage lending criteria. Consumer protection in mortgages falls under:
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Consumer Protection Act (1979)
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Financial Institution Business Act (2008)
These laws set standards on interest calculation, disclosure, and debtor rights.
Common Legal Pitfalls
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Unregistered Property: No mortgage rights exist without Land Office registration.
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Undisclosed Encumbrances: Buyers must check for prior mortgages, servitudes, or liens.
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Mortgage in Foreign Currency: Not permitted unless the lender has specific approval.
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Incorrect Title: Mortgaging Nor Sor 3 land is riskier due to potential disputes.
Conclusion
Mortgaging property in Thailand is a legally recognized method of securing debt, with well-defined procedures under Thai law. While Thai nationals and companies have relatively easy access to mortgage financing, foreign nationals face substantial limitations. Understanding the structure, registration process, and enforcement landscape is critical—especially in high-value property transactions.
Given the nuances of Thai property law, parties involved in mortgaging or securing property-related loans should consult experienced legal counsel and conduct thorough due diligence to safeguard their interests.
