My father-in-law borrowed money from an agency, with the title to his land and house as collateral. To that end he signed a mortgage contract, stating that the interest would be 15% per year (the legal interest limit in Thailand). The contract itself does not contain anything regarding the duration of the loan or the terms of repayment, other than that the interest should be paid monthly.
Apparently he was told - outside the contract so he didn’t sign for it - to repay in 36 months, with the total amount to be repaid being the borrowed amount plus 3x the yearly interest. I’m not sure this is legal, as in my view it raises the actual interest above the legal limit, but he didn’t contest this at the time. His financial/legal insight/knowledge is close to zero.
Now, at the end of the first year, it appears he is four months behind and he got a letter from a lawyer hired by the agency that the contract is to be canceled . He is given the choice between paying the remaining 28 months in full within 60 days or loose his house and land.
It was only at that point that I learned about it. He didn’t really understand the situation he got himself into, he hadn’t understood the consequences of the contract, nor had he read any of it. He had just signed where they told him to sign.
I’m looking for ways to help him out of this mess and to avoid him loosing his land and house. One option is that I just pay the demanded amount in full and subsequently arrange for him to repay me over a much longer time and without interest.
However, that raises some questions as to the correctness of the sum to be repaid. Seeing that the actual contract doesn’t say anything on duration, or on the terms of repayment or on cancellation/early settlement, it doesn’t seem right to have to pay 3 years interest when settled and fully repaid after one year. Of course there will be a legal default interest for the four missing installments, I do understand that, but it’s the 2x 15% interest I’m having problems with to accept.
Anyone out there able to shed their light on this? Grateful for any constructive comments!