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
Effective from 2017-01-05 - Jan 04 2017
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Referring to Article Eleven of the executive regulation of the Real Estate Finance System issued by Royal Decree No. M/50 dated 13/08/1433 H, which states that "The real estate financier may not grant credit in any form of financing that exceeds 70% of the value of the property subject to the real estate financing contract. The institution may change this 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 executive regulation of the Real Estate Finance System from (70%) to (85%) of the value of the first home for citizens only, while banks and financial institutions will continue to grant mortgage 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.
Please take note and comply accordingly, effective Thursday, 07/04/1438 H, corresponding to 05/01/2017 G.