Rent to Own Alternative


The rent to own home ownership option allows potential homeowners to immediately take possession of the home they wish to own even when they cannot afford the upfront costs or do not qualify for financing due to weak credit scores.

How Rent to Own Alternative works


  1. Choose your home
    Alternative Finance would offer rent to own only on properties owned by the Bank i.e. housing projects financed by the Bank.
  2. Rent your home
    Customer and bank sign all necessary tenancy agreements.
    Customer moves into his/her new home.
  3. Purchase your home
    Bank promises to sell to the tenant for an agreed price at the end of the tenancy period.
    Promise to sell agreement is executed.Customer exercises his/her right to purchase option.

Features of Rent to Own Alternative


This option is available only to employees of pre-approved institutions. The basic features are detailed below:

TermsDetails

Property ownershipThe property must be Bank financed housing projects. All legal titles would be in the name of the Bank.

Standard RentThe standard rent is determined competitively.Standard rent is paid in advance annually/bi-Annually.

Promise to SellThe Bank promises to sell the property to the customer at the end of the tenancy period or anytime within the tenancy period based on agreed terms and conditions of sale.

Purchase PriceThis is the price at which the property is offered to the potential home owner in the promise to sell agreement.

Initial Ownership ContributionThis is a one-off payment made as initial ownership contribution towards purchasing the property in future. Initial contribution is set at a percentage of Purchase Price and is put in a Sharia compliant Investment at agreed profit sharing ratio (PSR).

Annual Ownership ContributionThe annual ownership contribution is additional contribution towards home ownership.Annual ownership contribution is paid in advance along with standard rent annually/bi-annually OR as agreed.
Annual ownership contribution is set as a percentage of purchase price and put in a Sharia compliant investment at agreed profit sharing ratio (PSR).

Tenancy PeriodThe tenor of the tenancy contract is set at maximum of 5 years. The customer may elect to buy the property anytime during the tenancy period.
Where the customer chooses not to continue the tenancy before the end of the tenancy period he/she would immediately have access to his accumulated ownership contribution. However, ownership contribution would be paid only after the property has been sold and associated costs duly considered.

DocumentationTenancy Application Form to be completed by customer
Tenancy Agreement to be executed by both parties
Promise to Sell

Other Costs borne by customerHome maintenance and repairs
Utilities and management charges

Cost borne by BankProperty Insurance
Property taxes and land use charges
Major Asset replacement

Benefits of Rent to Own Alternative


  1. No lengthy home finance approval process. Approvals are usually done within 48 hours
  2. No credit rating challenges. Rent to own qualification is available even with credit restrictions and low credit rating
  3. Allows you to conveniently save up towards owning your home
  4. Rental premium can be increased to any amount that is convenient
  5. The promise to sell/buy agreement is independent of the tenancy agreement
  6. Commitment deposit and rent premium is credited fully (100%) towards home ownership
  7. You earn profit share on your commitment deposits and rent premium
  8. Purchase price is agreed at the inception of the promise to purchase/sell agreement
  9. You will be put in full control of the home for the period of the tenancy without having to own it