Get Your Dream Property: Expats Guide to Obtain Mortgages in Indonesia

Indonesia’s beautiful landscapes, rich cultural heritage, and low cost of living make it an appealing destination for expats looking to relocate. With the availability of mortgages for foreigners, purchasing your dream home in Indonesia is no longer a pipe dream. An expat guide to living in Indonesia, especially in obtaining mortgages in Indonesia, is needed to get your relocation run smoothly.

In this comprehensive guide, we will look at how to get a mortgage as an expat in Indonesia. We will provide you with valuable insights to help you make informed decisions about your property investment, from understanding the eligibility criteria to navigating the application process. Prepare to embark on a journey to owning your dream home in the Indonesian countryside as a part of an expat guide to living in Indonesia.

Is it possible for expats to get mortgages in Indonesia?

The property mortgage facility is now available to both Indonesian citizens (WNI) and foreign citizens (WNA). As is well known, the government has enacted regulations governing expats’ ability to purchase property in Indonesia. Article 186 of Agrarian and Spatial Planning/National Land Agency Regulation Number 18/2021 governs foreigners’ home ownership restrictions:

For the site house:

Houses with the category of luxury houses in accordance with the provisions of laws and regulations; 1 piece of land per person/family; and/or the land is at most 2,000 m2; 

For flats:

Flats are in the category of commercial flats. In the case of providing a positive impact on the economy and society, the site house can be given more than 1 piece of land or an area of more than 2,000 m2, with the permission of the minister in charge of government affairs in the fields of agriculture, land, and spatial planning.

According to the article, expats are permitted to own landed houses with status built on state or private land with a Right to Use (HPL) Certificate. Furthermore, foreigners are permitted to own flats or flats on land with the status of building use rights (HGB). According to these regulations, expats cannot purchase all types of property, even if they have ownership rights.

Expats are not permitted to own real estate with a Certificate of Ownership (SHM). Property with certificates of ownership may only be owned by Indonesian citizens, according to applicable regulations. Nonetheless, as previously stated, foreigners can still apply for a mortgage to purchase a home.

When applying for a mortgage for expats, however, a number of terms and conditions must be met. Furthermore, the number of banks offering mortgages to expats is limited. Not all Indonesian banking institutions offer mortgages to foreign nationals.

Requirements to get mortgages in Indonesia

In order to apply for a mortgage in Indonesia, here are the requirements that all expats must meet:

• All nationalities except African territories citizens
• For employees: min. 2-year working periods (including previous working periods)
• For self-employed: min. 4 years within the industry
• 21-57 years old
• Minimum income IDR 25 million/month
• The maximum credit period is 25-30 years

Documents needed:

• KITAS/KITAP/KIMS/KTP WNA
• NPWP; annual tax return
• Marriage Certificate, Birth Certificate, Prenup Agreement
• Reference Letter, Company legality
• Saving Account mutation
• Collateral document

If the applicant is self-employed, there are some additional requirements that must be submitted, such as a notary company act (Akta PT), domicile licence (SKTU) if applicable, trade licence (SIUP/NIB), and so on.

Steps on obtaining mortgages in Indonesia

In order to get mortgages in Indonesia, the applicant must follow these steps in the application process:

SLIK Checking Process

When the borrower wants to apply for a mortgage, before moving on to the next step, they must pass the SLIK check, or BI Checking in Indonesia, by the bank to which they want to apply for the mortgage. This step takes one to two days after the borrower gives their identity card and NPWP. After the result is out, the borrower can complete the documents needed to continue the mortgage process. Please note that there will be different policies about the passing score in SLIK Checking between the banks.

Appraisal Process

This process will be carried out if you pass the BI check. As the name implies, appraisal is a process in which the bank assesses the property value that will be used as mortgage collateral. This step is taken if you buy a property from an individual or developer who does not work with a bank.

Credit Analysis Review

In this process, the complete document will be reviewed by a bank analyst. The completeness and accuracy of the document will be checked by the bank. The borrower will be interviewed by a bank analyst before the analyst interviews company HR for an employee or a company client if the borrower is a self-employed employee and has close family on the emergency contact application form. This might take two to three working days.

Credit Approval

After conducting an analysis based on several considerations, the bank will then decide whether the mortgage application can be approved or not. If approved, the process is not finished yet. During this time, the bank will give you an offering letter and an SPK (Surat Perjanjian Kredit) that contain the documentation and agreements, which you can learn about and take advantage of to get cheaper fees. And after all the fees and interest rates are settled, the debtor and bank will agree on the date of the credit agreement. Sometimes the bank gives fourteen to thirty working days before the offer letter expires.

Credit Agreement

A credit agreement involves the debtor (and the debtor partner) as the applicant, the bank representative, and the home seller’s or developer’s representative. This process must be carried out in front of an appointed notary if the debtor bought the secondary property. All the authentic documents must be brought by the debtor so the bank and notary can verify the authentication. The first instalment will start 30 days after the signing.

What happens after your mortgage in Indonesia is approved?

These are the steps that the applicant must know or follow once the loan is approved by the lender:

Loan Disclosure

The lender will provide you with a loan estimate and a closing disclosure in its offering loan letters, which outline the terms, interest rate, closing costs, and other details of the loan. Review these documents carefully because, in this step, you will be given 14 working days to review and negotiate the price.

Conditional Approval

While your loan may be approved initially, it might be subject to certain conditions. Common conditions include providing additional documentation or meeting specific requirements.

Closing Preparations

Once all conditions are met, you will work with the lender and property agent involved in the transaction to schedule the closing date. The lender will prepare the final loan documents and coordinate with the PPAT/land deed official to handle the closing process. In this step, you must finish paying the property tax for purchasing a secondary home, but if you are purchasing a primary/new home, you don’t need that.

Document Signing

On the scheduled date, you will attend the credit agreement signing, in Indonesia, Akad. This includes the promissory note, mortgage or deed of trust, and other required paperwork. You’ll also pay the closing costs and any remaining down payment. And then your first instalment will start 30 days after the document’s signing.

In order to make your mortgage obtaining process easier, LetsMoveIndonesia, our partner, has collaborated with various banks to make it easier for both expats and local residents to process their mortgages in Indonesia. Their mortgage consultants are also well-versed, so you can understand and navigate the mortgage process without fear of missing a step. Visit letsmoveindonesia.com right away to learn more about their various mortgage services, and don’t hesitate to consult with them for free about the mortgage you’re planning.

Have a Plan to Move to Indonesia?

If you are thinking about moving to Indonesia, expats are advised to make a plan. Obtaining a mortgage is one of the first steps in planning your move. This will aid in the financing of your country home or property purchase. It is also a good idea to look for an expat guide to living in Indonesia.

This guide can help you navigate the local culture, find employment opportunities, and understand the healthcare and education systems. A well-researched plan will ensure a smooth transition and will assist you in settling into your new life in Indonesia.

Check out the other articles from Social Expat for more business-related things in Indonesia: