Bridge Loan

A bridge loan is short-term financing that covers a temporary timing gap — such as buying a new property before selling the old one, or funding a developer until long-term financing arrives — and is repaid from a specific expected source such as a sale. Saudi Arabia has no law dedicated to bridge loans; they are usually provided through Sharia-compliant structures such as Murabaha or Tawarruq with property security, and are more common for companies and developers than for individuals. General rules apply: an individual borrower is subject to SAMA’s Responsible Lending Principles and debt-burden limits, with the obligation measured at the average of its installments even if repayment is a single payment at the end; if secured by a registered mortgage, the Registered Real Estate Mortgage Law applies. For off-plan projects the law requires any financing obtained by the developer or landowner for a licensed project to be deposited in the project escrow account, so bridging finance cannot be used outside that account’s controls. The main risks are about timing: if the old property sells late or for less, or if a developer’s sales or permanent financing are delayed, the borrower faces a large maturity or two sets of payments at once. The repayment source should therefore be assessed realistically, and the full cost — profit, fees, valuation and mortgage registration — compared with alternatives such as selling first or delaying the purchase.