The market for mortgages in Mongolia is growing, yet remains a small percentage overall, with around half the population of the largest city, Ulaanbaatar, living in traditional accommodation. Obtaining finance locally for real estate in this frontier market may be challenging for foreign investors. 

Can foreigners obtain a housing loan from a Mongolian bank?

Mortgage penetration in the country is extremely low: below 10 per cent in some areas and around 14 per cent in the capital Ulaanbaatar. In July 2013 the Bank of Mongolia initiated a subsidized mortgage programme to help local low-income families access credit. It also provided much needed capital to the local commercial banks. Since the policy was initiated, interest rates have fallen from highs of 27 per cent and the size of the mortgage market in Mongolia has tripled.

However, the local banks in general prefer to lend to Mongolians. For example, Khan Bank has apartment loans available to permanent residents only. The maximum loan amount is MNT 150 million for apartments in Ulaanbaatar or 80 per cent of the purchase amount, with a loan period of 180 months. Golomt Bank has mortgage loans of up to MNT 160 million with loan terms of up to 15 years.

What other financing options are available to foreigners?

Property developers may have their own in-house financing available to foreign investors.  In Mongolia, non-bank financial institutions, including those which offer loan products as alternatives to banks, are regulated by the Financial Regulatory Commission, so it is worthwhile checking their licenses.

However, with no foreign exchange controls, or restrictions on the flow of foreign capital into or out of the country, foreigners may also source their funds outside of Mongolia.

Source: Mongolian Properties Real Estate Guide 2017

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