Real estate financing contract in Saudi Arabia

Real estate financing contract in Saudi Arabia

Home ownership is currently one of the most important decisions that citizens and residents in Saudi Arabia are keen to make, especially with the updates to the current real estate systems.

One of the most important real estate contracts in this field is the real estate financing contract, which contributes to realizing the dream of many beneficiaries to obtain suitable housing according to specific conditions and controls.

What is a real estate financing contract?

A real estate financing contract is a contract concluded between the real estate financier “bank” and the beneficiary, in which the real estate financier undertakes to provide the necessary financing for the beneficiary to own a residence in exchange for fees and interest agreed upon in the contract.

What are the types of real estate financing contracts?

• Subsidized Real Estate Financing Contract: This is a program provided by the Real Estate Development Fund and the Ministry of Municipal Affairs and Housing “Sakani” that aims to bear interest and profits for the beneficiary.
• Traditional real estate financing contract: It is a direct agreement between the client and the bank, specifying the interest withheld and the monthly installments.
• Flexible financing contract: Provides the client with flexible repayment solutions commensurate with his income.
• Real estate financing contract: The bank provides financing to the customer in exchange for mortgaging the property as a guarantee of repayment.
• Real estate financing contract in lease form: This is when the financing contract is a lease contract that ends with ownership.
• Co-financing contract: This contract allows more than one client to participate in obtaining one financing, such as a couple subscribing to obtain joint financing.
• Prepaid financing contract: This is a contract in which the client pays the first installment of financing in a large amount to reduce the value of the installments.

Real estate financing contract in Saudi Arabia

“Many real estate disputes start from a contract that was signed without an accurate understanding of its terms, especially in real estate financing contracts that include long-term obligations and penalty clauses that may not be clear from the beginning.

Reviewing the contract from a specialized real estate attorney helps you know your rights, obligations, and the ability to negotiate terms before it’s too late. Book your consultation now with a specialized lawyer from the office of Lawyer Abdul Majeed Al Rashid and protect your real estate investment with confidence”

What are the terms of a real estate financing contract?

What are the terms of a real estate financing contract?

Article 9 of the Executive Regulations of the Real Estate Finance System stipulates that the real estate financing contract concluded between the real estate financier and the beneficiary must be in writing and must include the following information:

• Names of the parties to the contract, their personal data and their residential addresses.
• Duration of the real estate financing contract.
• Total financing amount.
• Cost of term.
• Annual percentage rate.
• The total amount payable by the beneficiary at the time of concluding the contract.
• The amount of installments that the beneficiary must pay, indicating their periods and number.
• Fee payment periods.
• Explain the effects of late payment of installments.
• Documentation fees.
• Necessary warranty and insurance.
• Procedures for the right to withdraw from the contract, its terms, and the financial obligations arising therefrom.
• Early payment procedures.
• Performing the right to terminate the real estate financing contract.
• Data of the property being funded.
• The real estate financier’s declaration that he has verified the integrity of the property’s ownership.
• The beneficiary’s acknowledgment that he has viewed, inspected and approved the property.
• Bank account number.
• The duration of the real estate developer’s warranty for the building.
• Registration number of the owners association in properties with common parts.
• The beneficiary’s consent to have his information included in the credit record.

What are the conditions for benefiting from subsidized real estate financing in Saudi Arabia?

• The real estate financing contract must be concluded with a real estate financier approved by the competent authorities.
• The beneficiary must have a credit record with one of the service providers licensed in Saudi Arabia.
• Ensure that all requirements for obtaining financing are met.

Can I terminate the real estate financing contract?

Can I terminate the real estate financing contract?

The beneficiary can terminate the real estate financing contract according to the mechanism and conditions for terminating the real estate financing contract from the banks and the controls and conditions agreed upon in the contract.

The beneficiary must commit to paying the fines and implementing the obligations mentioned in the contract termination clause.

How do I view a real estate financing contract?

The beneficiary can obtain a subsidized real estate financing contract by visiting a “residential” site affiliated with the Ministry of Municipal Affairs and Housing and following the following steps:

• Choose a service “electronic real estate financing” from the Sakani platform.
• Log in through your National Unified Access Account.
• Choosing the unit for which you want to obtain real estate financing or reserving a unit from the real estate market.
• Fill in the required data in the application form.
• Submit the request.
• Review the list of financing offers sent by approved banks.
• Choose and approve the appropriate offer.
• Follow up on the financing request by visiting the bank’s branches.

Real estate financing contract in Saudi Arabia

Making a real estate financing decision without sufficient legal awareness may expose you to financial risks and future disputes that you do not need.

Understanding the real estate financing contract and carefully reviewing its terms is the safe way to own your property without surprises.

The office of lawyer Abdul Majeed Al-Rashed provides you with direct access to a lawyer specialized in real estate cases to draft contracts and review their terms, provide legal consultations, attend sessions before the competent courts and represent you legally when needed.