With the new SAMA mortgage regulations passed for 2015, consumers are now required to have a minimum down payment of 30% of the value of the property which they would like to purchase. Meaning if a property which you are interested in is SAR 1,000,000, you would be required to have SAR 300,000 available as a down payment.
An alternative to this is to avail a personal finance which is for a shorter duration than a regular mortgage, and use the funds to purchase the property directly. As personal finance can be used as per the liking of the customer, many individuals choose this over other financing options.
Personal finance tends to have the lowest rates of financing products in the market, therefore is more sought after. With rates as low as 1.30%* per year for 5 years, a consumer has the opportunity to borrow large amounts and put the money to use where they feel is required.
A disadvantage of doing this however is that reduced tenors means limited financing amounts, i.e. a consumer will only be allowed to pay back 33% of their monthly income as an instalment, which means they would only get 33% of their monthly salary multiplied by the number of months of their financing.
[Related: Buying property in Saudi Arabia]
Monthly Salary – SAR 10,000
Monthly instalment amount – SAR 3,333.33
Total repayment at the end of a 5 year financing (including agreed profit) = 3,333.33 x 60 = SAR 199,999.8
The above alternate recommendation may be applicable for those individuals who have larger salaries however may not be beneficial for those who have lower salaries.
The regulator is open to feedback and suggestions of consumers and you can write to them informing them of your situation in order to request for further assistance. Apart from this, the government of Saudi Arabia has agencies which offer financial support to citizens who are looking to join the property market.