When people need a lump sum quickly and own an unencumbered house or plot, Thai practice offers two familiar routes: a mortgage (jam-nong) or a sale with right of redemption (khai fak). Roadside ads and online pages often print the two words side by side as if they were interchangeable. Legally they are different transactions, and when things go wrong the outcomes could not be further apart. Plenty of owners have lost an entire house over a few hundred thousand baht simply because they did not understand what they signed. This guide separates the two clearly, shows the real cost, and explains how to protect yourself if khai fak is genuinely your only option.
A mortgage registers your property as collateral for a debt at the Land Office. Ownership remains fully yours: you can live in it, rent it out, even sell it (the buyer either assumes the mortgage or it is discharged on transfer day). The only change is an entry on the back of the title deed recording the mortgagee and the secured amount.
The decisive feature is that on default the creditor cannot simply take the property. They must serve formal notice, sue, obtain a judgment, and then have the Legal Execution Department auction the asset. That takes a long time, and throughout it the debtor can negotiate, restructure or sell privately to clear the debt. This is why banks and licensed lenders use mortgages. The downside is strict credit assessment — irregular income or a blemished bureau record often means rejection.
Legally, khai fak is a sale contract. Ownership passes to the buyer on registration day, subject to the seller's right to redeem the property within an agreed period by paying the redemption price. The buyer's name goes on the title deed from day one. If the period ends without redemption, the property becomes the buyer's absolutely — no court, no auction, and no refund of the difference even if the asset is worth several times the money received.
Its popularity comes down to speed and ease. Most khai fak buyers are private investors who look at the asset rather than the seller's credit, so payslips and bureau reports barely matter and money arrives within days. For anyone a bank has turned away it is the one open door — which is precisely why khai fak traps tend to catch people in their most vulnerable moments.
After widespread losses of farmland and homes, Thailand passed the Act on Protection of the Public in Sale-with-Right-of-Redemption Contracts for Agricultural or Residential Land (2019). It covers agricultural and residential land where the seller is an individual. The essentials:
| Issue | Rule | In practice |
|---|---|---|
| Redemption period | At least 1 year, at most 10 years | No more 3–6 month contracts designed to fail |
| Buyer's return | Capped at 15% per year | Anything above cannot be charged |
| Advance notice | Buyer must notify in writing 3–6 months before the deadline | Without notice, the seller gets an extra 6 months to redeem |
| Use during the contract | Seller keeps possession and use unless agreed otherwise | You can keep living in the home or farming the land |
| Buyer refuses payment or hides | Seller may deposit the redemption money with officials | Counts as redemption even if the buyer evades |
These protections help enormously, but they do not erase the central fact: once the deadline passes without redemption or a lawful deposit, ownership is gone for good. Counting the days precisely is everything.
Most people look only at the monthly rate. But for tax purposes khai fak is a sale, so registration day carries nearly all the costs of a genuine transfer: a 2% registration fee on the appraised value, withholding income tax based on appraised value and years held, 3.3% specific business tax if held under five years (or 0.5% stamp duty where exempt), plus a smaller fee again on redemption.
Picture land appraised at THB 2 million raising THB 1 million for one year at the 15% cap. Interest alone is THB 150,000, on top of tens of thousands — sometimes over a hundred thousand — in fees and taxes on day one. All in, the real cost of borrowing that million for a year can exceed 20%, several times a bank home-equity loan.
| Item | Mortgage | Khai fak |
|---|---|---|
| Ownership | Remains with the owner | Passes to the buyer immediately |
| Typical amount | Based on credit and collateral | Often around 30–60% of asset value |
| Registration cost | 1% of the mortgage amount (capped) | 2% of appraised value + sale-type taxes |
| On default / non-redemption | Court, enforcement, auction; surplus returned to debtor | Property becomes the buyer's outright; no surplus |
| Suits | Borrowers who pass lender criteria | Only those with a clear, certain repayment source within the term |
Not every khai fak ends badly; many people use it successfully as a short bridge while awaiting a sale or a bank loan. The key is a watertight process before you sign:
Yes, if the buyer agrees, and the extension must be registered in writing at the Land Office. Verbal or chat-message agreements are dangerous because they are hard to prove if the buyer later denies them.
Before the deadline, your best options are a new buyer or a lender to take over, or selling on the open market at full price and redeeming from the proceeds. After the deadline there is almost no route back, short of proving in court that the contract disguised a loan or involved fraud — a long fight.
Under the 2019 Act, for residential property the seller retains possession and use unless the contract says otherwise. Read that clause carefully before signing.
Both routes produce cash, but the risks differ completely. A mortgage keeps courts and enforcement procedures as a buffer; khai fak has a single redemption deadline separating getting your property back from losing it forever. If a licensed lender will lend to you, take that route first. If khai fak is unavoidable, do it at the Land Office, read every line, and plan your redemption money from day one. Learn more about title deeds and due diligence on the MyProperty blog.
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