Home Financing Bay’ Bithaman Ajil

HAFIZAH BINTI MOHD JUPRI 2014204936

HAZNIZA BINTI MD HIDZIR 2014693438

NOR ZAHIRAH BINTI MAK MURI 2014689062

NURFAKHRIAH HAKEEMA MOHD RADZI 2014663964

CLASS: JBM 242 4C

CONTENT

• DEFINITION

• ELEMENT/ CONDITION

• FINANCIAL TERM

• ILLUSTRATION

• ALLIANCE ISLAMIC BANK’S PRODUCTS

• CALCULATION

• SHARIAH ISSUE

DEFINITION

• Refers to the sale of goods on a deferred payment basis at a price which includes a profit margin agreed by both Customer and Bank.

ESSENTIAL ELEMENTS/CONDITION

•Capable of accepting responsibility -sound mind- matured- intelligent•Not restricted from dealing in business transaction- not bankrupt• Not being forced into contract

SELLER/BUYER

TRADING CONTRACT – BUY AND SELL

• Exist • Halal (lawful)• Valuable• Seller – real owner• Known to seller and buyer

MERCHANDISE/GOODS

ESSENTIAL ELEMENTS/CONDITION

• Must be known (stated in the contract)

• Currency specifiedPRICE

• In definite/decisive language• Acceptance consistent with

offer• Done in a contract meeting

AQAD

HOME FINANCING TERMSTERM DESCRIPTION

1. Margin of financing Up to 100%

2. Payment period Up to 30 years

3. Financing rate/ profit rate Fixed and competitive

4. Processing fee Waved

5. Eligibility Resident/ non – resident

6. Takaful coverage Long Term House Owner’s TakafulTakaful Mortgage Plan

7. Documents required Photocopy of applicant’s ICLatest 3 months salary slipEmployer’s confirmation letterFrom J/EAS&P Agreement of LO from developer

8. Benefits Selling price is knownNo extra chargesFlexible payment methodEarly payment entitled to rebates

HOME FINANCING ILLUSTRATION

CUSTOMER/ BUYER

HOUSE DEVELOPER

ISLAMIC BANK

1

3

4

2

HOME FINANCING ILLUSTRATION

EXPLANATION:-

1. The customer identified the house he wishes to buy. Then, customer will sign S&P agreement and pays the deposit to house developer since he had agreed.

2. The Islamic bank will purchase the qualified asset from the developer on purchase price on the cash basis.

3. The bank will sells the asset to customer at a marked-up price.

4. The customer will repay back the selling price on a installment basis.

ALLIANCE ISLAMIC BANK’S PRODUCT

1) i-WISH HOME FINANCING-i

• A no-frills basic Islamic home financing which is a Shariah compliant product.

• Less than RM100,000

Benefits:

• No set up or monthly maintenance fee.

• Refinancing from a conventional loan to Islamic financing entitles customer to a full waiver on the stamp duty.

• New purchasers, subsale, top up, unencumbered property financing entitles customer to a 20% waiver on the stamp duty.

• Rate protection from the Base Rate (BR) increase with capped ceiling rates.

Features Terms

Profit rate Up to BR + 0.55% For Cashline Facility-i BR + 1.85%

Tenure Up to 35 years/ 70 years of age

Age requirement 21 years old and above

Margin of financing Up to 90% + 5% Mortgage Reducing Term Takaful/ or Financed Entry CostMax 70% MOF for Cashline Facility-i

Financing type • Completed or under-construction property

• Subsale• Top up financing• Refinancing from another

bank with or without cashout

• Unencumbered property financing

2) i-WISH FLEXI HOME FINANCING-i

• A flexible Islamic home financing which is linked to the current account.

• More than RM100,000

Benefits:

• No set up or monthly maintenance fee.

• Deposits in the Mudharabah current account will be set off against the financing outstanding principal for profit charge calculation. Earn profits as well on the deposits itself.

• Cheque book and ATM card for easy withdrawals from the deposit linked account.

• Refinancing from a conventional loan to Islamic financing entitles customer to a full waiver on the stamp duty .

• New purchasers, sub sale, top up, unencumbered property financing entitles customer to a 20% waiver on the stamp duty.

• Rate protection from the Base Rate (BR) increase with capped ceiling rates.

Selling Price (SP) based on CRR

SP = PR * n

PR = AF * Financing Amount (Purchase Price)

AF = r ( 1 + r ) ^ n / ( 1 + r ) ^ n

NOTE:

r = profit rate (CRR)

n = number of periodic payment (month)

AF = annuity factor

PR = periodic payment

Installment Financing Computation

EXAMPLE :

..Based on profit rate of 6%

FA : RM 100,000 r : 9.9%n : 240 (months)

STEP 1: Annuity Factor (AF)

r = 9.9 / 12 =0.00825

n =240 monthly installments

AF =[0.00825(1+0.00825)^240] / [(1+0.00825)^240-1]=0.009584

STEP 2 : Periodic Repayment (PR)

=AF x Financing Amount (PP)

=0.009584 x 100,000

=RM 958.40

• If default payment for 2 months

=958.40 × 2 months

=RM1916.80

=1916.80 × 1% × (2/12)

=RM 3.19

STEP 3 : Selling Price (SP)

=PR * n

=958.40 * 240

=RM 230,016

STEP 4 : Profit

=SP-Financing Amount (PP)

=230,016-100,000

=RM 130,016

SYARIAH ISSUE

SHARIAH ISSUE1. Why non-Muslim can accept the Bay

Bithaman Ajil contract compare than Muslim?

2. Can the applicant make a home financing under Bay Bithaman Ajil contract, if they does not have any collateral?

3. Why people chooses Housing Loan instead of Home Financing?

Thank You