Diminishing Musharaka
Diminishing Musharaka is a form of partnership, which ends with the complete ownership of a partner who purchases the share of another partner in that project by a redeeming mechanism agreed between both of them.
Applying this mechanism on property financing, we will enter into a partnership with you for the purchase of a property, thereby having common ownership in it. Thereafter, we will lease our share in the property to you and will receive agreed rentals. Periodically, you will purchase a pre-agreed percentage of our share in the property, thereby increasing your ownership in the property and reducing our share by a similar amount. The ownership of the entire property will pass to you upon successful completion of the agreed lease term.
Details of the terms under which this product is offered are outlined below:
Terms of Financing:
Bank Participation : Maximum 50% of the property value
Financing Period : Up to 10 years
Mode of Payment : Quarterly, Semi-annual or Annual terms are available
Source of Payment : Rentals of the property
Bank’s Rental : EIBOR rate plus margin applied on the outstanding value of the Bank’s share in the Musharaka Property for each rental period
Security : First class mortgage on the land & building, post dated cheques covering installments
Insurance : The Musharaka property to be fully insured in Bank’s favour
Qualified Assets : Residential, Office Buildings & Villa Complexes
Documentary Requirements:
Primary documents comprise:
Individuals
1. Copy of valid passport
2. Completed finance application form
3. Copy of site plan
4. Copy of title deed
5. Copy of lease contracts covering purchase of existing rental property
Companies
1. Copy of valid Trade License
2. Copy of Commercial Registry
3. Copy of Partnership agreement (in case of partnerships)
4. Copy of valid passport of partners (in case of partnerships)
5. Copy of valid passport of authorized personnel and copy of Articles of Association defining their powers
6. Copy of site plan
7. Copy of title deed
8. Last 3 years’ financials
9. Copy of lease contracts covering purchase of existing rental property.