In purus sem felis condimentum adipisc molestie nibh integer sollicitudin. Varius dictum risus fermentum.
Mortgage financing refers to a long-term financing extended to finance construction or purchase of real estate. The financed customer or conventionally termed as mortgagor, repays the bank or traditionally mortgagee, the financed amount plus profit, gradually building equity in the property.
The bank’s term of Mortgage financing is between 6 and 15 years.
Mortgage financing is normally associated with the acquisition of real estate, either for personal or commercial usage.
The title to the mortgage may be handed over to the customer depending on the kind of mortgage (the financing contract) the customer has been granted, still the mortgagor may have the right to use of the property while the mortgage is in force.
Mortgage within the Islamic financing can be offered under Musharaka, Murabahah, Ijara and occasionally Mudharabah.
Musharaka Mortgage financing is normally issued for commercial mortgage on real estate in which its ownership will be jointly held by the bank and the customer.
The real estate under Musharaka Mortgage financing is also used as collateral or part of the collateral to secure repayment on the side of the other partner.
The selected type of Musharaka by the bank is diminishing partnership (Musharaka Mutanaqisah), but the bank may decide to engage on other types of Musharaka.
Musharaka Mortgage financing in its Sharia approval; must go through Sharia Advisory Committee for compliance review and approval. Where the limit does not exceed TZS 300 million, such review by Sharia Advisory Committee may be delegated to Sharia Compliance Officer.
Though the contract will be under partnership, due diligence must always be conducted on the other partner (the applicant) and all financing criteria as per the bank’s lending policy must be adopted
As the product falls under Musharaka, then all step by step procedures, flowcharts and accounting entries will be applicable as in the Musharaka product.
All KYC documents as per the bank’s Operations Manual and the bank’s Lending Policy,
Business plan of the project,
Letter of Offer
Musharaka Contract
Diminishing Musharaka Contract
Building Permit (if applicable),
Bill of Quantity,
Deposit of customer’s share,
Security documents as listed in the Bank’s Lending Policy for commercial lending or employer’s guarantee for salaried financing;
Ijara Mortgage financing is offered under commercial mortgage on real estate in which its ownership is held by the bank where the tenant (customer) leases the property.
Under Ijara Mortgage financing, the ownership of the property is always held by the bank singly unless the financing is on syndication arrangements, then the ownership can be shared by members of the syndication.
Where Ijara is classified into Operating Ijara which does not include a promise to transfer the legal tittle of the leased asset to the lessee at the end of lease and Ijara Muntahia Bitamleek which is concluded by passing the legal tittle of the leased asset to the lessee; the bank mostly operates under Musharaka Muntahia Bitamleek in which once the bank has fully recovered her financing amount the property is sold to the tenant.
Ijara Mortgage financing in its Sharia approval must go through Sharia Advisory Committee for compliance review and approval. Where the limit does not exceed TZS 300 million, such review by Sharia Advisory Committee may be delegated to Sharia Compliance Officer.
Mortgage financing under Murabahah in its Sharia approval must go through Sharia Advisory Committee for compliance review and approval. Where the limit does not exceed TZS 300 million, such review by Sharia Advisory Committee may be delegated to Sharia Compliance Officer.
Due diligence shall be conducted on the lessee who must fulfil all the lending criteria as per the bank’s lending policy.
All KYC documents as per the bank’s Operations Manual and the bank’s Lending Policy
Application Form
Business plan of the project (if applicable),
Building Permit (if applicable),
Bill of Quantity (if applicable),
Deposit of Margin of Seriousness (as applicable),
Ijara Contract with the Customer
Mudharabah Mortgage financing is a commercial mortgage on real estate in which its ownership is held by the bank while the customer serves as a property manager.
Under Mudharabah Mortgage financing, the ownership of the property is always held by the bank unless the financing is on syndication arrangements, then the ownership may be shared by the members of such syndication.
Since the bank is not in real estate business, it may decide to sell the property later after full repayment of its financing either to the manager or to third party.
Investment in Mortgage financing under Mudharabah shall be solely after getting management’s approval due to the risks involved in the product.
Mudharabah Mortgage financing in its Sharia approval must go through Sharia Advisory Committee for compliance review and approval. Where the limit does not exceed TZS 300 million, such review by Sharia Advisory Committee may be delegated to Sharia Compliance Officer.
Mudharabah Mortgage financing in its Sharia approval must go through Sharia Advisory Committee for compliance review and approval. Where the limit does not exceed TZS 300 million, such review by Sharia Advisory Committee may be delegated to Sharia Compliance Officer.
Where approval has been obtained from the management, due diligence must conducted on the other manager who must fulfil all the lending criteria as per the bank’s lending policy. As Mudharabah cannot be offered to every customer, procedures to dealing with it will be decided upon approval of the offering by the management.
All KYC documents as per the bank’s Operations Manual and the bank’s Lending Policy
Business plan of the project,
Building Permit (if applicable),
Bill of Quantity (if applicable),
Agreement between the Bank and the customer on profit sharing mode and other terms of Mudharabah.
Copy of tittle deed for security or employer’s guarantee (whichever applicable)
