Buying Property in Bali: Simple Guide to Mortgages and Financing

Mortgage financing in Bali, Indonesia, is a common practice for both locals and foreigners looking to purchase property. It is though easier for locals than for expats. However, there are some important considerations to keep in mind.

This guide will explain what you need to know about getting a mortgage or property financing in Bali. We’ll cover the differences options and how to plan it for a seamless property purchase.

1. Foreign Ownership Regulations: Foreigners are generally not allowed to directly own freehold land in Indonesia. However, they can acquire property under a HGB (Hak Guna Bangunan or Right to Build) by setting up a foreign-owned company (PT PMA) and through leasehold agreements. Without setting up PT PMA, leasehold title is not recommended.

This commercial title has no discrimination between a local-owned company (PT PMDN) or PT PMA, the regulations are the same. At some stage if the title is sold back to an Indonesian citizen, in most cases it may be converted back to freehold again.

2. Leasehold Agreements: Many foreigners opt for leasehold agreements, which allow them to lease land or property for a specified period, often up to 25 or 30 years, with an option to renew.

3. Local Bank Financing: Some local banks in Bali offer mortgage financing to foreigners, but the terms and conditions can vary significantly from those for Indonesian citizens. Interest rates and loan-to-value ratios may be higher for foreigners, and the approval process can be more stringent. As well as having an established relationship with the Bank.

4. Alternative Financing Options: In addition to traditional bank financing, there are alternative financing options available in Bali, such as private lenders or developer financing, in particular towards off plan projects. These options may offer more flexibility but could come with higher interest rates and higher cost or other conditions. Some also do various types of crowd funding, crypto, and others.

5. Legal Assistance: Given the complexities of property ownership and financing in Indonesia, it’s advisable to seek legal advice from a qualified lawyer who specializes in Indonesian real estate law before entering into any agreements or contracts.

6. Currency Risks: Foreigners should also be mindful of currency risks when taking out a mortgage in Bali. Fluctuations in exchange rates could affect monthly repayments, so it’s important to consider this factor when budgeting for a mortgage

7. Foreign mortgage companies: Recently we have also seen a few set up aiming specifically towards finance of expats in the Bali market. Some of them are well structured with all relevant permits and a strong supportive tech aspect.

8. Pre- Sales: The most common finance type for expat developer is to base it on pre-sales or partly pre-sales. Pre Sales or Pre-selling property is when the unit is not yet available/not yet built. Pre-sales method attract buyers with potentially lower prices and flexible payment plans spread out during construction.

In any case whether you are buying one villa or a smaller project, financial planning and finance is extremely important to evaluate and mitigate risks. To learn more about the property financing in Bali, contact Seven Stones Indonesia via Whatsapp at +62 (0) 877 7711 7701 or send your inquiry to . Reach out to our team and find out how we can support you in this.

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