Financing a Bali villa: mortgages, and what a foreigner can borrow against

Foreign buyers in Bali are usually told that financing is “not available” and pay cash. The law is more specific than that. Whether a villa can secure a loan depends on the land right it sits on; whether a bank in Indonesia may lend depends on the borrower's residence; and what the lender can do on default is fixed by statute, not by the loan agreement. This page reads the 1996 mortgage law, the 2021 land regulation, the land ministry's electronic registration rules and Bank Indonesia's regulations.

Seven words in a Bali mortgage

The terms in the law and in the deed.

Which villa titles can be mortgaged

UU 4/1996 Pasal 4 lists the land rights that can carry a hak tanggungan: hak milik, HGU and HGB, and hak pakai on state land that must be registered and is transferable. Buildings, plants and works that form one unit with the land and belong to the right holder can be included, if the deed says so expressly (ayat (4)). PP 18/2021 confirms HGB (Pasal 45(1)) and hak pakai with a term (Pasal 60(1)) as security; hak pakai granted for as long as it is used cannot be mortgaged (Pasal 60(3)).

The leasehold problem

Most villas held by foreigners in Bali are leaseholds. A lease is a contract right over someone else's freehold and is not among the rights Pasal 4 lists. A lender cannot take a hak tanggungan over it; whatever security a leasehold offers has to come from elsewhere. Leasehold explained.

The foreigner's house and the company's villa

A foreigner may hold hak pakai with a term (PP 18/2021 Pasal 49(2)(e)) and own a house on it (Pasal 71). That right can be mortgaged. A PT PMA holds HGB, which can be mortgaged too. If a foreign holder stops qualifying, they have one year to release or transfer the hak pakai, or it ends by law (Pasal 50); a mortgage ends when the land right ends, but the debt survives (UU 4/1996 Pasal 18(4)). No provision we read deals with that sequence for a foreigner's house specifically; the chain is our reading. Hak pakai and the stay permit.

Who may lend: residence, not nationality

Bank Indonesia's money-market regulation prohibits banks from lending, in rupiah or foreign currency, to non-residents, except under conditions tied to certain economic activity in Indonesia (PBI 6/2024 Pasal 115). A non-resident is someone not domiciled in Indonesia, or domiciled here for less than one year. We found no Bank Indonesia or OJK rule barring property loans because a borrower is foreign; the line is residence. Whether a given bank lends to a resident foreigner is its own credit policy.

Foreign lenders

The mortgagee may be any individual or legal entity acting as creditor (UU 4/1996 Pasal 9), and the Elucidation to Pasal 10 allows the loan agreement to be made abroad and the parties to be a foreign individual or entity, if the credit is used in Indonesia. A party domiciled abroad must choose a domicile in Indonesia in the deed, or the PPAT's office is taken as chosen (Pasal 11(1)(b)).

Loan-to-value

Bank Indonesia caps the loan-to-value ratio on property loans. The current caps apply until 31 December 2026 (PADG 30/2025), and BI's summary lists up to 100% for banks meeting its non-performing-loan requirement. These are ceilings, not offers.

Making and registering the mortgage

The mortgage is granted by an APHT made by a PPAT (Pasal 10(2)). The deed must state the parties and their domiciles, the secured debt, the security value and the collateral (Pasal 11(1)). Registration is compulsory (Pasal 13(1)), and since 2020 runs only through the electronic HT-el system (Permen ATR/BPN 5/2020 Pasal 3, 33).

Three texts count the seven days differently: the 1996 law dates the register entry to the seventh day after complete documents; PP 18/2021 Pasal 89 says at most seven calendar days after the documents are declared complete; the 2020 regulation issues the electronic certificate on day 7 after system confirmation. The mortgage exists from the register date, not from the signing (Pasal 13(5)).

Default, sale and release

If the borrower defaults, the first mortgagee may sell the villa on its own authority by public auction and repay itself first (Pasal 6, 20(1)). A private sale is possible only if owner and lender agree and it gets the highest price, one month after written notice and publication in at least two local newspapers, with no objection (Pasal 20(2)-(3)). Paying the debt and costs before the auction is announced stops the sale (Pasal 20(5)). Any clause letting the lender take ownership of the villa on default is void (Pasal 12); the lender can buy only through the Pasal 20 procedure.

The mortgage ends when the debt is paid, the lender releases it, a court clears it, or the land right itself ends (Pasal 18(1)). Splitting a mortgaged plot needs the mortgagee's written consent, and the mortgage follows the new plots. Splitting a certificate. Extending a mortgaged hak pakai whose area changes needs the mortgagee's consent too (Permen ATR/BPN 18/2021).

What this page does not cover

• Any bank's lending criteria, rates or products. Not set by these regulations.
• Borrowing abroad against overseas assets to buy in Bali.
• Fiduciary security over movables, such as furniture.

Common questions