Alizz Islamic continues to offer partnership financing product

Muscat: Alizz Islamic Bank, one of the pioneering Islamic banks in Oman, will continue to offer a home financing product based on the Diminishing Musharakah contract.
This offering is consistent with Alizz’s policy to meet the various requirements of its clients. In addition to Diminishing Musharakah, which refers to a joint partnership contract between the financier and the client, the bank also offers other financing modes such as Ijarah and Forward Ijarah, both of which it launched earlier.
Under the partnership financing mode of Musharakah, which literally means partnership, the financial institution and its client jointly own a property. The bank’s portion of the property is divided into a number of equal shares, and the client, based on his promise to purchase, will gradually purchase shares of the bank’s portion until the client owns the whole property. It is an option that is based on the principle of partnership between two parties where the bank and the client jointly purchase and acquire the property the client chooses.
Both parties may jointly register the asset’s title under their names or under the name of one party, depending on the agreement.
How does it work?
The procedures are easy. The client files a home financing application based on Diminishing Musharakah and supplies the bank with necessary documents, such as a property valuation report, and all information pertaining to the property to be purchased. The client deposits his contribution to the Musharakah capital, which is at least 20 per cent of the property’s total value. The application and supporting documents are then processed by the bank.
Once it has accepted the application, the bank will require the client and the seller, who in this case is the property owner, to visit the branch to sign the contracts, including the Diminishing Musharakah Agreement, Promise to Purchase, and Master Share Sale Agreement, which governs the sale of the bank’s shares to the customer, as well as the Asset Purchase Agreement.
The contract contains the details of the partnership, the property location and value, the amount paid by each party – referring to the bank’s contribution and client’s contribution to the value of the property – and the shares of the bank and the client in the property upon signing the contract.
“This product is designed in an innovative and modern way to satisfy the needs of different clients,” explained Moosa Al-Jadidi, Chief Operating Officer at Alizz Islamic Bank. “The minimum age of the applicant should be 22 years, but it is 18 years for public sector employees. The minimum salary requirement is OMR350. The settlement term can be up to 25 years with maximum financing of 80 per cent of the property value or OMR450,000.”
The promise to purchase the bank’s share is a bilateral undertaking signed by the customer, he stressed. The bank and the client will jointly purchase the property from the original owner after the promise to purchase is signed.
After the purchase, the bank will gradually sell its shares through the exchange of Share Sale Offer and Acceptance. The bank can also grant the client permission to lease if the client wants to rent out the property.
With the host of benefits and features this product offers to its clients, Alizz Islamic Bank is keeping up its commitment to enhance the lifestyle of its customers by offering them Shariah-based solutions to own their dream home.