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Mortgages for Expats in Saudi Arabia

Author: Jim Newham
Submitted: October 2015

The first Saudi law permitting the use of mortgages was only passed in 2012, and home loan legislation is still in its infancy. Over the previous 30 years, Saudi scholars and mullahs had been discussing whtether or not mortgages were Islamic. They eventually agreed, on the proviso that all mortgages are to be Sharia compliant. What this amounts to in general terms is more protection and safeguards for the buyer.

Saudi citizens have recently benefited from increasingly relaxed mortgage laws, which make it easier for the wealthier locals to get a mortgage. At present, an estimated 1% of nationals use a mortgage to buy a house, though this is increasing. It is possible that in the near future, mortgage laws will be relaxed for foreigners too. At present, however, the overwhelming majority of the 8-9 million expats currently resident in Saudi Arabia are either not interested in buying a property or cannot afford one.

Even for the non-nationals who can afford to buy property, getting a mortgage from a Saudi lender is going to be very hard. However, King Abdullah Economic City (KAEC – pronounced ‘cake’), a vast planned city, is currently under development to the north of Jeddah. This city will have more relaxed laws including freehold property. This means that expats will be encouraged to stay more long-term in the new city and they will probably be offered mortgages.

Since it is nigh on impossible to obtain a mortgage through a Saudi institution, you could consider obtaining a loan from a foreign bank that has branches in Saudi Arabia. Otherwise, you could choose to obtain a mortgage from a lender in your home country. In this case, you should be aware that currency fluctuations may lead to you repaying more than you had originally planned.




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