Increase the Maximum LTV of Real Estate Finance Granted by Banks and Exchangers to Citizens to Own the First Home
| No: 381000039082 | Date(g): 8/1/2017 | Date(h): 10/4/1438 |
Translated Document
Referring to Article Eleven of the implementing regulation of the Real Estate Finance Law issued by Royal Decree No. M/50 dated 13/08/1433 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" based on what serves the public interest.
I would like to inform you that SAMA has decided to increase the maximum financing amount percentage to the value of the property stated in Article Eleven of the implementing regulation of the Real Estate Finance Law from (70%) to (85%) of the value of the first home for citizens only, while banks will continue to grant real estate financing at (70%) of the value for the second home and beyond for all beneficiaries.
SAMA emphasizes the importance of reviewing risk management policies to enhance procedures for maintaining the financial position's safety, including monitoring and measuring credit concentrations, and ensuring the ability of beneficiaries to repay before granting financing—of all types—taking into account the financial and credit obligations of the beneficiaries, while adhering to the relevant instructions from SAMA.
For your information and action accordingly as of Thursday 07/04/1438 H, corresponding to 05/01/2017 G.