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Home Finance

Understand everything important about Home Finance and get on the right track to finding the best products. If you are a first-time buyer, moving between properties, buying a second property or just looking around for a better deal then our Home Finance page will definitely help you. Following are various companies offering Home Finance deals available.

With many different companies offering thousands of different deals it’s no wonder that the choice is bewildering – and it’s obvious in such a competitive area that there are some great deals to be found. You just need to shop around and be aware of any pitfalls – if a deal looks too good to be true, then it probably is – check every small detail with care and take some professional advice if you feel you need to.

  1. Al-Barka Bank
  2. Askari Bank
  3. Bank Al-Habib
  4. Dubia Islamic Bank
  5. Bank Islami
  6. UBL Ameen Bank
  7. Alfalah Islamic Banking and Finance
  8. House Building Finance Corporation

Islamic Home Financing:

Ever since the inception of life, shelter has been rated among the primary needs of mankind. Owning a home for oneself still remains an exclusive dream for many. Islamic Home Finance service has made the realization of your dream to have a house of your very own possible. Whether you plan to build a house, tailor made to your requirements or buy a constructed house,

Islamic Finance offers you to get Home Loan Financing with five variations:

i. Build a Home (Tranche Loans)
ii. Buy a Home
iii. Buy a plot and Construct
iv. Renovation
v. Balance Transfer Facility

Build a Home: This type of loan is extended to customers who already own a piece of land and need funds to meet cost of constructing property on that land. The disbursement of this loan is made in four or less tranches during the construction phase depending upon the bills of quantity (BOQ) submitted by the customer and the quantity and quality of construction done.

Buy a Home: As the name suggests, this type of loan is meant for the purchase of an already constructed property.

Buy a Plot and Construct: This loan type is extended for the customers who want to buy a plot and construct a property on that plot. The disbursement of this loan is made in lump sum for the purchase of plot and then in four or less tranches during the construction phase depending upon the bills of quantity (BOQ) submitted by the customer and the quantity and quality of construction done. The bifurcation of limit for purchase of plot and construction will be applicable as per prevailing SBP prudential regulations.

Renovation: This loan is offered to customers who already posses a house and require funds for renovation/ improvement. Disbursal will be made only after customer has provided BOQ and an undertaking for utilization of this facility for the purpose of renovation/ improvement.

Balance transfer facility: This kind of loan is offered to existing borrowers of other institutions, who may want to switch over from one Bank to another Bank because of service, pricing or relationship reasons. The loan with the other financial institute should have been paid in accordance with bank’s credit history and debt burden requirements. Balance transfer facility is strictly not allowed for the properties that are still under construction.

General Terms and Conditions:

An Individual must fulfil the following requirements to be eligible for applying Home Loan:

  1. Must be a Tax Payer.
  2. Must have a Valid Computerized National Identity Card (CNIC).
  3. Mobile is mandatory. In case of Buy / Build a Home cases, we do not require land line at current or potential residence, in case of Home Renovation cases in absence of PTCL Land line, any mobile or Wireless connection at residence is acceptable.

ELIGIBILITY CRITERIA:

 Age Primary Borrower’s age

Salaried     Minimum age: 23 Years
Maximum age: 60 Years at maturity
SEB/P Minimum age: 23 Years
Maximum age: 65 Years at maturity
Co-borrower Only Son and Spouse are allowed as Co-borrower. However, a blood relative is allowed in case of joint ownership in property:
Minimum age: 18 Years
Maximum age: 65 years
Income Rs. 35000/- per month
Additional / Surrogate Income Source
  1. Rent Agreement has become a major source of additional income of our applicants. Therefore, to authenticate, all rent agreements will have to be supported by the title documents of that particular property.
  2. The title has to be in applicant’s name (primary or co-borrower).
  3. Any other source of Income which can be verified through documents.
Length of Employment

 

 

a) Salaried
Employees with a minimum service length of 2 years including present employer.b)Self Employed Professionals
Architects, Doctors/ Dentists, Engineers, Chartered Accountants and Consultants. Minimum 2 years in profession.c) Self Employed Business Individuals

  1. Minimum 3 years in same line of business
  2. In family businesses only, where a Director was engaged in the business prior to being elevated to Director, or was made Director at least a year ago due to educational responsibilities/ engaged in other family related business, the same will also be considered. The business in such case must be 3 year old at least, and the Director applying for loan must have been in the same post for minimum of 1 year.

 

Eligible Financing limits under each product category:

Product Category

Minimum limit

Maximum Limit

Build a Home (Tranche Loans)

Rs. 300,000

Rs. 30,000,000

Buy a Home

Rs. 300,000

Rs. 30,000,000

Buy a plot + Construction

Rs. 300,000

Rs. 30,000,000

Renovation Loan amount calculation not to exceed the 50% of the total asset value OR 60% of Assets value, whichever is lower.

 

Why Islamic Housing Finance ?

  1. The Nature of contract is a co-ownership. The transaction is not based on lending & borrowing of money but on the joint ownership of an asset.
  2. In Islamic Housing Finance, bank takes risk in property up to the extent of it’s ownership share.
  3. Incase musharakah property is collapsed, rental payment is stopped, as due to non-availability of asset, rent cannot be charged.
  4. With the purchase of musharakah share consistently, the rental amount is gradually reduced every month.
  5. No restriction on purchase of additional musharakah share.
  6. No fixed penalty on early termination.  Bank’s profit on early purchase of musharakah share is subject to the appreciation of the musharakah property value.

Issues in Islamic Housing Finance!

  1. Use of Interest based benchmark for calculation of rent.
  2. There is a need to formulate a mechanism to calculate rent based on real-life market rate for rent in the area where property locates.
  3. Unavailability of financing to lower-middle class segment which is in dire need of home shelter.
  4.  Although the public awareness about Islamic mortgages is increasing but still at large, public is not aware of the Islamic Mortgage.
  5. Further research is need from shariah perspective to develop more Islamic modes for mortgage financing.
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