Two banking groups operating in the Maldives have announced the launch of new home financing mechanisms they have said will cater for predicted growth in the country’s real estate sector.
Both the Maldives Islamic Bank (MIB) and Bank of Maldives (BML) have launched new home finance packages in recent weeks to try and cater for a perceived emerging demand amongst local buyers.
MIB on Tuesday (February 5) officially launched a new mechanism for home financing based on the Islamic principle of “Diminishing Musharaka”.
A spokesperson for MIB explained that the principle required the formation of a partnership between itself and an individual customer or institution to jointly buy a property.
Once acquired, eligible customers enter an agreement with the bank to divide shares in the property into units. These units must must then be periodically purchased by the client until ownership is fully transferred from MIB.
Properties covered by the financing program must be fully constructed and not more than 10 years old, while also found to have been kept in good condition in accordance to standards outlined by the bank.
The maximum financing available under the scheme was 80 percent of a property’s total purchase price, the bank added. The maximum tenure of the loan – the time by which the customer is required to have fully paid back the financing to MIB – is 20 years.
According to the company, individual customers looking to make use of the finance scheme must be 21 years of age or above, while institutions must be registered in accordance to local laws.
Prior to the MIB launch, state-owned BML also announced a new home finance package for its customers that it claims offers more favourable loan conditions for the purchase or refinancing of properties specifically in the capital Male’ or the nearby island of Hulhumale’.
“Recently the Maldives has seen a rise in real estate business and this sector is expected to grow in coming years. To cater for this demand, BML launched a competitive home loan product,” a spokesperson for the company has claimed.
Despite being one of the country’s longest-serving providers of home finance, BML has claimed that its revised loan package was more attractive to local buyers, increasing the repayment period to 15 years from the previous 10.
The company added that the interest rate for the loan had also been cut to 11 percent, a .75 percentage point reduction on its previous housing finance package. Meanwhile, customer equity has also been cut to 20 percent from 30 percent previously, the company added.