Real Estate Financing
The Real Estate Financing Program is a residential program provided with profit support from the Real Estate Development Fund, where beneficiaries can receive amounts of up to 500,000 Saudi Riyals. The program complies with Islamic Sharia principles and is offered to individuals benefiting from the Real Estate Development Fund and the Ministry of Housing.
Recently, the concept of real estate financing has become widespread as an attractive financing option to acquire suitable housing, whether it’s a villa, ready-made apartment, or even under construction. This trend has encouraged many residents of the kingdom to search for the best companies offering real estate financing services with suitable guarantees and competitive profit margins. It’s worth mentioning that real estate financing companies and other financing entities in the kingdom have significantly contributed to increasing interest in real estate financing by offering diverse financing solutions and products that meet the needs of Saudi society in the real estate sector.
What is real estate financing?
Islamic real estate financing, also known as Sharia-compliant financing, is among the best means of real estate financing available today and is highly popular due to its adherence to Islamic principles. This type of financing provides the necessary liquidity to purchase desired properties, whether in the category of villas or apartments, whether in Riyadh, Jeddah, Dammam, Khobar, or other cities and regions of the kingdom. If you are looking for villas for sale and those villas meet the conditions of Islamic real estate financing, you can apply for property finance and realize your dream of owning your home.
Real estate financing is a means to meet many real estate needs, whether for building a new property, completing the construction and renovation of an existing property, or any other needs you may encounter.
It is important to consider some criteria when choosing the appropriate financing system for you, such as understanding the cost of financing and the profit margin, and ensuring that the financing amount covers the costs of purchasing the desired property. You should also ensure the ability to repay installments on time to avoid any financial problems resulting from non-payment compliance.
What are the types of real estate financing?
There are several types of real estate financing in the Kingdom of Saudi Arabia, including the following:
Lease with eventual ownership through gift
It is a financing product designed to finance customers interested in purchasing properties from a third party. The financier purchases the property from its owner and registers the title deed in its name, then leases it to the customer for a specified period in exchange for rental payments. The lease contract includes a promise of gift, whereby the customer promises that at the end of the lease period, they will receive ownership of the property as a gift according to the agreement. Upon the customer fulfilling all rental payments, the property ownership is transferred, and the title deed is issued to the customer as a gift in recognition of their payment of the due rent.
The Murabaha System
It is one of the forms of Islamic-compliant real estate financing. The bank or financing company sells the property or housing unit directly to the beneficiary and transfers its ownership to them. At the same time, the property is mortgaged to the bank or company until the beneficiary can fully pay the agreed-upon cost. If the beneficiary is unable to pay the installments, the bank or company takes some actions, including selling the property at a public auction or reclaiming ownership. The property owner has the right to attend the auction and buy the property directly.
Lease with Promise of Gift (Ijara Mawsufa Bi al-Dhimmah)
A financing product designed to fund properties under construction or units sold off-plan, where the property is purchased from the owner (developer) in installments tied to construction stages and completion percentage. The property is leased to the client with a lease characterized by a promise of gift at the end of the lease period.
The title deed of the property unit is transferred to the company after the final installment of unit purchases, upon completion of the property and issuance of the title deed. The client pays a deposit during the financing period before receiving the unit, which is considered as an advance rental payment upon unit handover. The client continues to pay the rental installments until the end of the agreed lease period, and at the end of the term, the property ownership is transferred, and the title deed is issued to the client as a gift in recognition of their payment of the due rent.
In conclusion, With Bin Saedan company assistance, you’ve gained insight into the comprehensive guide to real estate financing and its diverse types.