In a recent announcement, the government of Bahrain has confirmed that personal loans cannot be converted into housing loans, rejecting a proposal that suggested otherwise. This decision was conveyed in a letter to the Speaker of the Council of Representatives, Ahmed Al Musallam, citing concerns that such a move could potentially disrupt current housing schemes and upset the balance of the housing finance system. The government emphasized that housing loans are strictly intended for the purpose of securing homes and expressed apprehension that converting personal loans into housing loans could devalue the housing loan system, making it more challenging for families to meet their housing needs.
To alleviate the financial burden on citizens and make housing loans more accessible, Eskan Bank, in collaboration with local banks, offers various housing loan programs such as ‘Tas’heel Financing’ and ‘Mazaya.’ These programs are designed to ensure that monthly payments are manageable based on individual earnings and affordability. Moreover, the government has increased the minimum loan amount to BD 40,000, with any excess amount being treated as a grant. Loans can also go up to BD 70,000 with government backing, ensuring that citizens have access to loans without facing excessive financial pressure.
In an effort to provide further clarity on salary deductions, the government highlighted that some banks do not always adhere to the 50 percent rule when it comes to deductions. In certain cases, deductions of up to 65 percent are allowed, especially for citizens utilizing the Mazaya scheme. Additionally, banks may extend mortgage terms to 30 years to help reduce the monthly payment burden for borrowers. The government is focused on ensuring that citizens have access to housing loans that are tailored to their financial capabilities and needs.
The government also mentioned that it is following the directives of Crown Prince and Prime Minister Salman bin Hamad Al Khalifa to cover property registration fees for citizens who are part of the ‘Tas’heel’ program. Furthermore, banks involved in housing schemes offer a ‘Joint Security Over Mortgage Asset Programme,’ which allows citizens to obtain additional mortgage loans alongside their initial ones. The government has expressed gratitude for the interest shown by the Council of Representatives in addressing housing needs but maintained that the proposal to convert personal loans into housing loans is not feasible. However, it reassured its commitment to working closely with the Council to find practical and fair solutions to meet citizens’ housing needs effectively.
