(A) The client:
What is home finance?
Home finance provides financial facilities in order to own a property after paying the entire indebtedness.
What are the funding programs of the Bank?
Murabaha and Ijara, with the promise of ownership.
Is the increase of the monthly rent in the contracts based on "Ijara with the promise of ownership", and is it linked to the real estate market, or to a specific index?
The increase is not linked to the market but to a specified index that calculates the average of funding in the bank for one year. It is calculated starting from the third year of the date of the contract so that the increase or decrease will be 1% of the average funding in the bank for the previous year or the monthly rent stays without any change, as provided clearly in the Ijara contract Article II, paragraph (b).
Can I join my wife or my brother to buy the property?
Currently only individual contracts apply, but soon we will apply joint contracts.
Is it necessary to open an account in a bank?
Yes, and that is to transfer the salary so that we deduct the due payments. Bank employees are excluded from salary transfer, however they need to open an account.
Should I transfer my salary in the case of Ijara/Murabaha?
Yes, salary transfer is required except for bank employees.
Can I postpone the payment of the month of Ramadan?
Currently this service is not available, however, it will be available quite quickly.
What are the procedures the bank will take in the event of death or complete permanent disability?
The remaining indebted amount will be waived while the ownership will be transferred to the inheritors in the case of death, and to your name in the case of permanent total disability.
Can I request the refund of the evaluation fee?
Yes, but only if the Bank did not implement the evaluation procedures.
In the absence of sufficient results of the Bank's evaluation, shall I pay any other fees for another evaluation?
You are not required to pay any additional charges; the Bank will conduct a third party evaluation on its own.
What are the client segments that can be financed?
Government and semi-government sector employees, the staff of the largest 100 companies, the employees of the clients of Corporate Banking Group, Business Banking, payroll service clients, retirees and Bank employees.
What is the lowest salary for the approval of funding?
The salary should be no less than SR 4,000 for Government and semi-government sector employees, no less than SR 6,000 for the staff of the largest 100 companies, the employees of the clients of Corporate Banking Group, Business Banking, payroll service clients, retirees and no less than SR 8,000 for employees of banks.
Shall the bank own the property before I sign the financing contract (Murabaha/Ijara)?
Yes, the bank will own the property before you sign the contract of funding. This ownership depends on the signature of the original owner on the contract with a condition of buying by the buyer.
Who approved that this home finance product is Shariah compliant?
It was approved by the Shariah Board of the Bank, headed by Sheikh Abdullah Bin Suleiman Al Manea
Have all the procedures of the home finance product been certified by the bank's Shariah board.
Yes.
(B) Finance:
Shall I get the amount of the finance in my bank account, like personal finance?
No. Bank will issue check to property owner & another check to commission beneficiary (If any).
What are the guarantees required by the Bank to finance a property.
- Salary transfer for Government and semi-government sector employees and retirees.
- Salary transfer, end of service benefits and/or company protection for the staff of the largest 100 companies, the employees of clients of Corporate Banking Group, Business Banking and payroll service clients.
- For Bank employees only, the property stays in the Bank's name.
What is the minimum age for the client when submitting the application?
- No less than 21 years old for Government and semi-government sector employees.
- 25 years for the staff of the largest 100 companies, the employees of clients of Corporate Banking Group, Banking Business, payroll Service clients and Bank employees.
- 35 years for retirees.
What is the least length of service
- 6 months for Government and semi-government sector employees.
- 12 months for the staff of the largest 100 companies, the employees of clients of Corporate Banking Group, Business Banking and payroll service clients.
- 36 months for Bank employees.
- From the date of retirement for retired employees.
What are the procedures of obtaining home finance?
- Complete a home finance application indicating the type of Murabaha/Ijara required.
- Once the initial approval is issued and the client approves it, he should provide the required documents for him and for the property.
- The bank shall evaluate the property through accredited valuation bodies and obtain an approval from the insurance company if required.
- The bank will issue a final approval, and once accepted by the client, the bank will buy the property from its owner by signing a buying contract with a condition of buying by the buyer.
- The bank then shall sell or rent the property to the client as specified earlier by him.
- The bank ensures that the client signs all the documents of the contracting phase.
- A check is issued to the owner of the property (the value of the property is mentioned in the price quotation), If there is a commission to be paid, the bank will issue a check for the broker.
- The title deed process of the property to the bank name should be completed.
- After paying the full amount, the ownership of the property is transferred to the client.
Is there a down payment for the approval of the funding?
Murabaha contracts
- Not required for Government and semi-government sector employees as long as the amount of funding equals the total value of the property (property owner value + the commission if any).
- The staff of the largest 100 companies, the employees of clients of Corporate Banking Group, payroll Service clients, retirees, Business Banking and bank employees should pay no less than 10% of the total value of the property (property owner value + the commission if any).
Ijara contracts with the promise of ownership
A down payment of no less than 10% of the total value of the property for all clients (excluding bank employees as Ijara contracts do not include them).
How is the amount of the payment calculated?
It is calculated from the total value of the property (property owner value + the commission if any).
Can the client increase the amount of the down payment?
Yes, but as long as the amount of funding is not less than 200,000 SR and the rate of the down payment is a whole percentage without fractions.
How is the profit of the finance calculated?
It is calculated depending on the outstanding amount of the total value of the property after deducting the amount of the down payment.
When should the down payment be provided?
It must be deposited in the account before singing funding contract
When should the client deposit the evaluation fee in his account?
They must be provided when all document completed.
How shall the monthly payments be paid?
The bank will deduct them from the account of the client.
Will the financial obligations on credit cards, whether from SHB or any other bank, influence the proportion of the total salary deduction percent?
All credit cards are not calculated within the monthly deduction percent,
Does the bank calculate the funding based on the basic salary or the total salary?
The calculation is based on the total salary.
Does the bank consider the income of the property as part of the income of the client?,
No, the amount of the finance is calculated based on the monthly income that the client earns from his work.
Is there a fee for evaluating a property? How much is it?
Yes, the evaluation fee is SR 1,450 (50% of the applicable fee) and must be deposited in the client's account to be deducted before the bank sends any request for evaluation.
Are there administrative fees?
No
Is there any change on the rate of profit during the period of funding?
In a Murabaha the rate remains as is, but in Ijara fixed/variable , it may decrease or increase annually after the second year starting from the date of the contract and with a limit of 1% of the average funding in the banks for the previous year or the monthly rent stays without any change
Are all the products of property funding subject to the supervision and control of the Shariah board of the Bank?
Yes, all the funding programs of properties are subject to the approval and supervision of the Shariah board of the Bank.
Is there an early mortgage settlement option?
Yes, and that would be according to the Bank's policies in this regard.
Is the lease contract with the promise of ownership valid for the entire duration of the lease?
Yes, it is valid and does not need any renewal.
Why do I have to transfer my salary, even though the property is still in the bank's name?
The salary transfer is required to guarantee the monthly payments. Bank employees are excluded.
Can I choose the repayment period I prefer?
Yes, you can choose the repayment term according to your credit standing.
should I be employed by a company that is recognized by the bank?
Yes.
When do I get an approval for the funding?
The approval is instant.
Can I choose any property regardless of the value?
Yes you can, provided that it does not exceed the maximum amount of approved funding, and is not less than SR 200,000 and as long as the rest of the conditions of the product apply.
Can I be funded for any repayment period?
Yes, provided that the funding period does not exceed the retirement age. The funding period of a retired client should not exceed his 65th birthday.
Does the approval on the funding include the client and the property?
Yes, it includes the client and the property because the property is an integral part of the approval.
Can I be financed with personal finance and home finance at the same time?
Yes, provided that the deduction does not exceed 50% of the total monthly salary for both finances.
If I already have personal finance can I get home finance?
Yes, provided that the deduction does not exceed 50% of the total monthly salary for both finances.
Can I have more than one home finance at the same time?
No, you cannot.
What is the maximum amount to be deducted from gross salary to finance a property?
50% of the total salary
Is it necessary for the insurance conditions to apply on both the mortgage amount and the age of the client?
Yes it is, but in case it was exceeded one can obtain an approval from the insurance company
When the client answers with "Yes" to one of the questions included in the funding request and related to his health, shall it be required to obtain the consent of the insurance company?
Yes, an approval from the insurance company should be obtained
In the case that the insurance company requested to conduct a thorough medical examination on the client, will he be charged with any fees for the required medical examination?
The client shall not assume any fees
What is the maximum duration for home finance contracts, Murabaha/Leasing?
Government and semi-government sector employees, Murabaha 25 years / Ijara 30 years.
The employees of clients of Corporate Banking Group, Business Banking and payroll service clients, Murabaha 25 years / Ijara 25 years.
Bank employees, Murabaha 20 years.
Retirees, Murabaha 15 years / Ijara 20 years.
The staff of the largest 100 companies Murabaha 20 years / Ijara 25 years.
What is the minimum period of financing for Murabaha/Ijara contracts?
5 years for all clients.
What is the minimum amount of funding?
SR 200,000 for all clients.
What is the maximum amount of funding?
Government and semi-government sector employees, SR 4 million.
- The employees of clients of Corporate Banking Group and payroll service clients, SR 3.5 million.
- Bank employees, SR 2.5 million.
- Retirees, SR 2 million.
- The staff of the largest 100 companies, SR 2.5 million.
(C) The property:
Is it possible to finance any kind of property?
Yes, you can finance any residential property, land, completed villas (compound or separated), incomplete villas (compound or separated), apartments, residential buildings. (Bank employees may not finance incomplete villas).
Are there any conditions concerning the type of property?
Yes, there are general conditions. The property should be located within the urban scope of major cities, the title deed should not be subject to any party, the completed property must have electricity and should be ready to move into, while the land must not be less than 200 Sqm. Apartments, residential buildings and incomplete villas should be no more than 7 years old and for completed villas they should be no more than 15 years old.
Is it possible to finance a property that is subject to the real estate development fund or any party.
No.
Will the property be evaluated by the bank? Who will perform the evaluation?
Yes, the Bank will evaluate the property through two certified evaluation bodies.
Does a 2.5% commission apply to every property I may want to buy? How much would it be, if any?
A commission is not a must for every property. It is 2.5% of the value of the property or less.
Who endures the expenses of maintaining the property?
In Murabaha contracts, the client endures all maintenance expenses, but in Ijara contracts with the promise of ownership, the client endures the operational maintenance expenses while the bank endures the basic maintenance expenses that were not caused by the client's misuse of the property.
Should the completed building be new or old?
The property may be new or old, provided that it is not more than 15 years old for completed villas, and not more than 7 years old for apartments, incomplete villas and residential buildings.
Can Murabaha and Ijara finance all property types?
Lands, incomplete villas, apartments, and residential buildings will be financed only based on Murabaha contracts. Completed villas can be funded through both Murabaha and Ijara.
What are the properties that could be financed and built incomplete.
Villas only.
Is it possible to rent the financed property?
Yes, but you must obtain a prior approval from the bank.
Does the availability of services form a condition of financing completed building?,
Yes, building services are required for completed properties (electricity at least) and the building must be ready for habitation.
Can I sell the property during the repayment period?
Yes, and you can do that through the bank as the property is assigned to the Bank. You should pay the full amount of the debt before transferring ownership. If the selling price exceeded the indebted amount, the exceeding amount shall be given back to the client only in Murabaha contracts, while in Ijara the bank give the right to the client.
Can I add an extension or modification in the building during the repayment period?
Yes, subject to obtaining prior written approval from the bank to do so. According to the conditions and instructions of competent authorities.
Can I build on the funded land?
Yes, but you must obtain a prior written approval from the bank.
Can I buy a property in any city in the Kingdom?
You can buy it in major cities that are approved by the bank later.
Is it possible for a client, who for example works in Riyadh or Mecca; to purchase a property in Jeddah?
Yes he can.
Shall the title deed of the property stay in the bank's name?
Yes, the bank continues to hold the title deed until full payment of indebtedness is made in both Murabaha and Ijara contracts.
Will the ownership of the property be transferred to SHB or to another body accredited by the bank?
The ownership shall be transferred to the Saudi Hollandi Real Estate Company (SHREC), which is owned by SHB, or to another accredited body in the cities that SHB cannot take assignment in, such as Mecca and Medina.
Can the bank fund me to buy fragmented land?
Yes, as long as all conditions apply.
Can the bank fund me to build on land that I own?
This type of funding is not available now, however, it will be provided through Istisna or Forward Ijara in the near future.
Can I choose a property from a real estate development company?
Yes.
Should the property have a separate title deed?
Not, condition
Is it possible to finance a villa of one level?
Yes, you can finance a villa consisting of one level or two.
Can the client know the results of the evaluation of the property?
Yes, the client can request that, but he will not know who carried out the evaluation.
Does the bank charge any approval fees related to building permits or services linked to the financed property?
No fees shall be collected, you only have to pay the installments regularly.
When can the client request any service to his financed property?
He can request that after the contract is done and the assignment to the bank is concluded, and during the validity period of the contract (Murabaha/Ijara).
What are the services that the client can request for the financed property?
Request a building permit, connect electricity, and connect water, renovation, adding complements or renting the property.
When rents rise in the real estate market shall the bank increase the monthly rent?
The increase in Ijara contracts happens according to what is specified in the contract signed with the client and not related to the raising rents in the real estate market.
Could the mortgage regulation if approved affect already signed finance contracts (Murabaha/Ijara)?
No, it will not affect them.
What is the difference between the operational and basic maintenance of the property?
Operational maintenance is the maintenance needed by the property to ensure continued utility while the basic maintenance is the maintenance upon which the survival of the property depends.
What is the building permit?
A document approved by the municipality to identify areas of construction of buildings.
What is the quotation?
A document which defines the value of the property required from the owner and beneficiary of the commission if any, showing that the property described in the quotation is the property wanted by the client, who should sign the quotation.