Looking to become a homeowner in Saudi Arabia? Luckily, residents are being encouraged to invest into the property market. The Mortgage Law is protecting the interest of buyers, and new housing units are being built to increase supply, bringing down prices.

If you are looking to buy, here is our guide to help you find mortgages in Saudi Arabia.

1. Start with securing a mortgage

If you want to become a homeowner, one the first things to do when buying property is to secure a mortgage. Based on how much money the bank agrees to borrow, you can start to shortlist properties, looking into areas which you can afford. [Related: Buying property in Saudi Arabia]

2. Compare, compare, compare

Don’t just head to the nearest bank and take out a mortgage. Compare home finance products in the market. Compare profit rates, early settlement fees, upfront fees, and loan amounts.

In Saudi Arabia the mortgage law increases the amount of finance available to buy a property, therefore giving you more home finance options.

Think about what you really want from your mortgage. Would you rather have a fixed rate or variable rate mortgage? How long will you take to pay it back? Do you want the flexibility to change lenders at any point? And if you know your home finance products really well, you can use your knowledge to negotiate better profit rates with the banks.

3. Factor in all the fees

Did you know that additional mortgage fees can add up to almost five percent of the total price of your property? That’s why you need to include all costs associated with taking out a mortgage when doing your sums, in order to get a real picture of how much it will really cost you.

Mortgage set-up fees include upfront fees – typically SR 1,700 – 10,000, and a valuation fee for valuing the property. Other additional costs can come in the form of payments to get approvals from authorities, such as the Ministry of Interior, and service fees for mediators such as lawyers or land brokers.

4. Don’t forget hidden fees

When taking out a mortgage, don’t just look at the rates, but also watch out for hidden fees such as the early settlement fees. Banks protect their interest by charging early settlement fees, and many of us overlook the charges for paying off a loan early. In Saudi Arabia, early settlement fees vary wildly – some banks charge zero percent, while others can charge a whopping 100 percent fee on the outstanding profit due for the entire loan period.

[Compare mortgages in Saudi Arabia]

5. Get your approvals

If you are an expat, you require approvals from licensing authorities, Ministry of Interior, and need to prove you have a good financial record.

Two people can also apply for a joint home finance with banks in Saudi Arabia.

6. Getting documentation

The general documentation required by banks:

  • Completed application for a mortgage
  • A salary letter from your employer with salary details
  • Copy of valid National Identify card or Iqama
  • Proof of home address
  • A location map of the desired property
  • Bank statements, usually between three to six months for non-salary transfer customers
  • Evaluation of the property
  • Copy of the title deed for the property

Remember, banks can ask for additional documentation depending on their requirement and customer profile.

7. Be aware of the housing shortage

Saudi Arabia is facing a housing shortage, with 20 million citizens still living in rented homes. To meet the demand, the government is building three million units by 2040. However, it also means your options as a buyer might be limited as owned property is in demand and supply is limited. [Related: Saudi government addressing housing shortage]

8. Be patient

Finding the right mortgage, securing it, finding the right property and getting your documentation in order will take time. Don’t stress; be patient. To speed things up, get your papers in order and start the process as soon as possible.