Change in the Maximum Ratio of the Financing Amount to the Value of the Property as Stated in Article Twelve of the Implementing Regulation
| No: 371000064087 | Date(g): 14/3/2016 | Date(h): 6/6/1437 |
Translated Document
In reference to Article Eleven of the Implementing Regulation of the Real Estate Finance Law issued by Royal Decree No. M/50 dated 13/8/1433 H, which states that. "The real estate finance entity shall not extend credit on any form of finance exceeding 70 percent of the value of the dwelling subject of the real estate finance contract. SAMA may change such percentage according to prevailing market conditions." And based on what is required by the public interest.
I would like to inform you that SAMA has decided to increase the maximum ratio of the financing amount to the value of the residential property stated in Article 12 of the Implementing Regulation of the Real Estate Finance Law from (70%) to (85%) for real estate finance companies, excluding banks.
I would like to emphasize the necessity for commercial banks and finance companies to verify the beneficiary's repayment capacity before granting financing—of all types—taking into account the financial and credit obligations of the beneficiary, and to fully comply with the instructions issued by SAMA in this regard.