(MENAFN- Muscat Daily) Muscat- Alizz Islamic Bank, one of the pioneering Islamic banks in Oman, has continued to offer home financing products based on the Diminishing Musharakah contract, which refers to a joint partnership contract between the financier and its client.
The product comes in line with the bank's policy to meet the various requirements of its clients. In addition to Diminishing Musharakah, the bank had earlier launched other financing modes such as Ijarah and Forward Ijarah. Musharakah literally means partnership. Under the partnership financing mode, the financial institution and its client jointly own a property. The bank's portion of the property is divided into a number of equal shares, and the client, based on his promise to Purchase, will gradually purchase shares of the bank's portion until the client owns the whole property. It is an option that is based on the principle of partnership between two parties where the bank and the client jointly purchase and acquire the property the client chooses.
Both parties may register the asset's title under their names together or under the name of one of them as per the agreement.
The procedures are easy. The client files a home financing application based on Diminishing Musharakah and supplies the bank with necessary documents such as property valuation report and all information pertaining to the property to be purchased. The client deposits his contribution to the Musharaka capital at a minimum of 20 per cent of the property's the total value of the property. The application and supporting documents are then processed by the bank.
Once it has accepted the application, the bank will require the customer and the seller (property owner) to visit the branch to sign the contracts, including the Diminishing Musharak agreement, Promise to Purchase and Master share sale agreement, which governs the process of selling bank's shares to the customer, as well as the Asset Purchase Agreement.
The contract contains the details of partnership, the property location and value, the amount paid by each party (bank's contribution and client's contribution to the value of the property) and the shares of the bank and the client in the property upon signing the contract.
'This product is designed in an innovative and modern way to satisfy the needs of different clients. The minimum age of the applicant should be 22 years, but is 18 years for public sector employees. The minimum salary requirement is RO350. The settlement term can be up to 25 years with maximum financing of 80 per cent of the property value or RO450,000,' said Moosa al Jadidi chief operating officer at Alizz Islamic Bank.
The promise to purchase the bank's share is a bilateral undertaking signed by the customer, he said. Then, the bank and the client will jointly purchase the property from the original owner.
After the purchase, the bank will gradually sell its shares through the exchange of Share Sale Offer and Acceptance. The bank grants the client a permission to lease as well if the client want to rent out the property.
Alizz Islamic Bank strives to enhance the lifestyle of its customers by offering them Sharia'a-based solutions to own their dream home. Everyone can enjoy a host of benefits and features that comes with this product.
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