HOME PURCHASE PLAN (HPP)
An-Nur offers Shariah compliant & flexible financing options for buying and/or refinancing a residential home based either on
"Musharaka" (shared equity with declining balance partnership) or
"Murabaha" (cost plus basis).
In general, home buyers interested in one of the above mentioned options are required to invest a minimum of 20% of the price of the home at least six months prior to becoming eligible for the Home Purchase Plan (HPP). The title to the housing unit could be in the name of An-Nur, until the home buyer accumulates the required number of shares and arrange for a transfer of ownership – or in the member’s name with An-Nur placing a lien on the house for security purposes.
(1) Musharaka: (shared equity with declining balance
partnership):
Under this option, both An-Nur & the member (buying a
house) jointly contribute the purchase price of the
house. As a return on An-Nur’s investment in the housing
unit, HPP members pay Occupancy Charge to An-Nur which
is determined on the following basis:
- Current market value rent in metro and surrounding area;
- Average return on An-Nur's other investments;
- Period of HPP agreement; and
- Other factors on management's direction.
This option also includes an accelerated payment plan – it provides for HPP member with the flexibility to pay an additional share contribution amount, with the monthly Occupancy Charge. As the HPP member's share contribution increases, the occupancy charge decreases proportionally.
The Musharaka plan also provides for An-Nur sharing a reasonable portion of the capital gain or loss of the property at the time of transferring of ownership.
(2) Murabaha - (cost plus installment basis)
This option is advisable for those who have significant initial investment & are looking for a smaller portion of financing for a short period of time – say three to five years. Under this option, An-nur will add a reasonable profit in its capital contribution & will set-up a monthly installment payment plan in consultation with the member buying a house under this option.
Distinct Advantages of Home Purchase Plan (HPP)
- Adherence to Shariah guidelines;
- You can rent a portion of your house with mutual agreement;
- HPP can be structured to suit the member’s convenience.
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