Maldives banks revising home finance to cater to emerging real estate demand

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.


5 thoughts on “Maldives banks revising home finance to cater to emerging real estate demand”

  1. Commercial banks will never lend money to someone who do not have money or property! Fact!
    MIB and BML are commercial banks and the rich must be owning shares in these banks!
    These banks cannot mortgage land of any one poor and lend money for developing it!
    This beautiful scheme will make the rich, even richer!
    Those who have new property in Male' now gets the chance to buy more property from Hulhumale' or Gulhifalhu!

  2. BML has a good news for all the borrower,

    but for the MIB the “Diminishing Musharaka” will just add burden to the poor.short explaination of “Diminishing Musharaka” This involves both the bank/customer purchasing the selected house and the customer paying back the exact initial investment from the bank over time. However, until the initial investment is paid-off the customer also pays rent for living in the house that is currently legally owned by the bank. Therefore the bank claim to make a legitimate profit from renting out the house that they legally own, and the customer apart from rent would pay the exact sum of money put in by the bank.

  3. Dear All,

    MIB's Diminishing Musharaka facility is aimed to help those who wanted to acquire completed property/ apartment from development projects, which are acceptable by MIB. Maximum financing period for this facility is up to 20 years, subject to terms and conditions

    At the moment this facility is only available for newly completed property. MIB is working to make the facility available for Refinancing, Renovation and Under Construction in the near future. For further information please visit our Financing Department at 7th Floor Post Building.


    Ritzza Rosli

  4. I wish that banks in Male would understand and consider the fact that it is extremely difficult for an individual to raise the 20 percent equity as developing a property in Male is like going into real estate . I wish that some mechanism is set in place whereby we can kick start the initial building phase. Most of the Maldivians are unable to build their house especially in Male because it is too expensive to raise the 20 percent equity.


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