Regulatory Alerts2017-04-11
Definition of Commercial Mortgage
The Saudi Central Bank issued a circular to standardize the definition of commercial mortgage financing to address inconsistencies in its application. The document defines commercial mortgage as credit granted to individuals or entities for purchasing, developing, or building real estate, specifically classifying it as commercial if the beneficiary is a legal entity, the property has five or more residential units, is primarily used for non-residential purposes, or is income-generating. Financial institutions operating in the Kingdom are required to update their policies and procedures to align with this definition starting from the third quarter of 2017.
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