Alternative Finance Product Overview
Product Introduction:
Our Alternative Finance product is funded by the Al Maktoum Private Office, the royal family of Dubai. It offers property owners a unique opportunity for equity release without the traditional banking constraints & is Sharia compliant.
How It Works:
1. Property Value:
If you own a property valued at, for example, 4 million AED, you can access a 50% equity release. This means you can borrow 2 million AED against your property & get cash in your bank account within 3 days of signing the agreement.
2. Repayment Terms:
For every 1 million AED borrowed, you will need to repay 200,000 AED.
Therefore, for a 2 million AED loan, the total repayment will be:
- Principal: 2 million AED
- Repayment Amount (200,000 AED ): 400,000 AED
- Total Repayment over 3 years: 2.4 million AED
3. Payment Deferral:
You won’t need to make any payments until the end of the agreement, allowing you three years to manage your finances.
4. Title Deed Arrangement:
Upon initiation, you’ll sign the title deed over to the Private Office. They will cover the 4% DLD (Dubai Land Department) charges associated with this transfer. When you decide to buy back your property within the three years, you will be responsible for paying the 4% DLD fees at that time. You will have a legally binding contract granting you the right to repurchase the property within the three-year timeframe.
The private office can rent out the property during this deferred payment period and will also pay for the service charges of the apartment, as they will be retaining the rental income during this time.
The 6.6% annual rate is based on an effective calculation, translating to 20% over the three-year period.
5. Living in the Property:
If you reside in the property, you have the option to negotiate your rental payments, which can be structured over four, five, or six cheques. Additionally, you could sublet the property and agree on the annual rent with the private office. As long as you make the agreed payment to the private office, you can sublet the apartment or villa and generate profit. For example, if you agree with the private office on an annual rent of 180,000 AED, you might be able to rent it out yourself for 220,000 AED in the current market, allowing you to earn a profit.
6. Fund Release:
The 2 million AED will be transferred to your bank account within 3 to 5 working days, pending any necessary developer approvals (NOC).
7. Early Repayment Options:
If you wish to repay the borrowed amount sooner (e.g., within 18 months), you can do so. However, you are still required to pay the remaining amount for the full three year term.
Early repayment allows for a quicker return of the title deed to your name, enabling you to either reclaim rental income or cease rental payments if you continue occupying the property.
Summary
This Alternative Finance product offers property owners a flexible way to leverage their investment for cash flow while ensuring compliance with Sharia financial principles. Backed by the prestigious Al Maktoum family, it can be particularly beneficial for those who wish to access equity while retaining the ability to live in or rent out their property.
