Eligibility
Tamweel Home Finance facility is available for Residents and Non-Residents of UAE, both salaried and self-employed.
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Tenure of finance
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Islamic financing techniques
Murabaha
A Murabaha is essentially a deferred payment contract, where the buyer identifies the property he/she wishes to purchase and agrees upon a price with the vendor. Once the financier has approved the purchase of the property, the financier will purchase the property in its name and resell it to the buyer against either immediate or deferred payment. The financier is entitled to profit, which is the difference between the price it pays to the vendor and the price at which it re-sells to the buyer.
Home Owner product of Tamweel uses the Murabaha mode of Islamic financing for sale on deferred payment / installment payment terms.
Ijarah
The term Ijarah means ‘to give something on rent' or to transfer the 'right to use' of a property to another individual in exchange for rent claimed from himr. Ijarah is like a conventional operating lease, where the buyer identifies the property he wishes to purchase and agrees upon a price with the vendor. Once the financier has approved the purchase of the property, the financier will purchase the property in its name and lease it to the buyer for a specified monthly (or otherwise) rental payment and lease term. At the end of the leasing term, the financier promises to transfer the title of the property to the customer, once all repayments have been made as per the agreement.
'Flexi Rent to Own', 'Fixed Lease to Own' and 'Yusr' are types of Ijarah contracts.
Istisna'a
Istisna'a mortgages are financial products widely used by Islamic banks to finance the construction of buildings and/or industrial assets. Under Istisna'a, the price is fixed with the consent of the parties and the specification of the house or building to be constructed, is fully agreed upon. If the customer has his own land and he seeks financing for the construction of a house, the financier may undertake to construct the house on that open land, on the basis of Istisna'a. If, however, the customer has no land and wants to purchase the land, the financier may undertake to provide him a constructed house on a specified piece of land.
Tamweel's ‘Home Builder' is an Istisna'a contract.
Type of profit rate
Fixed Rate Financing
Under this option, the profit rate is fixed for the full length of the financing term, i.e., it does not change. Therefore, the monthly installment also stays the same for the whole financing term making it easier for the customer to plan his budget. 'Home Owner' and 'Fixed Lease to Own' are fixed rate products.
Flexible (Floating) Rate Financing
This option provides the customer with a flexible profit rate. The Tamweel Base Rate will reflect movements in the six-month EIBOR rate (Emirates Interbank Offer Rate). The Tamweel Base Rate will remain valid for a six-month period and will be published on the 1st January and the 1st July each year. Therefore, the customer can now make the most of the low profit rates prevailing from time to time. A floating rate of profit enables him to make the most of the low profit rates prevailing from time to time. If he follows EIBOR trends and feel that he can take advantage of a flexible (floating) profit rate, then 'Flexi Rent to Own' is the product for him.
Basis for the calculation of profit
Flat Rate
The flat rate is multiplied by the original finance amount for the full term of financing to arrive at the total accumulated profit. As the customer pay through installments, the outstanding principal keeps reducing. Profit on a 'flat' rate basis is computed on the original financed amount and so turns out to be higher than the reducing balance basis for a given profit rate.
Reducing Balance
The profit is only charged on the outstanding balance of the financed amount, which keeps reducing. The principal component is deducted at the end of every month and then the profit is calculated on this new outstanding, reduced principal amount.
Installment Payments
Installment payments are the most common method of repaying finance. There are two types of installments, equated (fixed amount) or un-equated / variable (where all installments are not equal). The frequency of installments is usually monthly, but in some cases could be quarterly, six-monthly or annually. Tamweel offer payment plans with equated monthly installments. Even for our floating rate products, we equate the installments for every 12-month period.
General financing terms
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