Financing a mortgage in Bali

Foreigners to Bali often dream about owning their own home. It is possible but you have to get your paper work in order.

In the past financing for a mortgage was difficult for a foreigner in order to buy property, even though expats make an attractive financial proposition. The stumbling block was that the title deed was in the name of an Indonesian, rather than the person applying for the mortgage.

The fact that a foreigner cannot obtain a Hak Milik (freehold title) for land in Indonesia (despite what some real estate companies may lead you to believe), the name of a local ‘nominee’ had to be on the title document. This arrangement made Indonesian banks uncomfortable (do they know something we don’t!!!).

The introduction of Hak Pakai Atas Hak Milik (right of use above freehold land) is one way that foreigners can go about owning land in Bali and elsewhere in Indonesia. Hak Pakai (right of use) is a certificate that is valid for 25 years extendable up to 100 years. This is viewed by some people as the best solution for foreigners. With this structure the foreigner’s name is on the title deed and is eligible for a mortgage. Expats should have no trouble in securing a mortgage in this manner.

One company that is involved in this sort of structure is Asia Property Finance Management (APFM), that was set up to address the needs of expatriates in need on mortgage finance. APFM can arrange a Indonesian Property Loan (IPL) and working with an Indonesian bank, can also offer a range of mortgage currencies and associated interest rates offerings a degree of choice.

Features of the IPL include:
  • Available in $US, $AU, and rp.
  • Minimum loan is $12,000 and maximum $450,000
  • The maximum loan amount that can be borrowed is 60% of the property’s latest valuation: a 40% deposit is  required.
  • Maximum loan period is 1o years for principal and interest
  • Interest rates calculated at a variable rate, based on Cost of Funds for the currency of the loan, and a margin.

  • IPL is available to non-Indonesian citizens (foreigners) residing in Indonesia, subject to Bank approval.
  • Only existing residential dwellings in Indonesia such as house with land, apartment will be considered.
  • Loan can only be granted if the property is registered in borrowers’ name “Hak Pakai” or Title to Use the Land, with a Building Permit (or Ijin Mendirikan Bangunan – IMB) attached to the certificate.
  • Borrowers can only apply for one loan as foreigners are only allowed to own one Indonesian based property.
  • You must be able to demonstrate your ability to meet all your financial commitments, such as rent, living expenses, and loan repayments. The ability to repay the loan will be determined for each borrower and is dependent on their individual financial circumstances and the value of the security.