Amlak waives charges to aid partial loan settlement

In a move aimed at reducing its financial liabilities, Amlak Finance is waiving off prepayment charges for a limited period to allow partial settlement for ready properties.

In a letter sent to customers, the Islamic home mortgage company, said: “We are pleased to announce a special limited-time incentive offer for our valuable Ijara home finance customers.

"The offer, which is valid until September 9 entitles you to partially settle your existing Ijara home finance.”

The letter also says that upon such partial settlement, the customer becomes eligible for reduced variable rental payments for one lease period (a reduction of up to one per cent on calculation of variable rental) of the Ijara.

The minimum cap for the offer is Dh250,000 and lease period mentioned is normally of six months.

Arif Alharmi, Chief Executive Officer, Amlak Finance, could not be reached for comment.

Amlak usually charges an early settlement fee of two per cent of pre-paid amount, or a minimum of Dh3,000, while early settlement charges are two per cent and five per cent of the outstanding principal amount, or a minimum of Dh15,000 for own funds and buyouts.

Experts say the move is once again aimed at reducing the company’s financial liabilities.

“Amlak has been coming out with a number of offers to reduce its liabilities… one of them has been waiving off of prepayment charges,” an analyst said.

According to the company website, the Ijara finance option is more reliable and convenient than your conventional finance schemes.

In this case, the property is acquired by the home finance company and subsequently leased out to the customer for an agreed rent and specified period.

This specified rent comprises 'fixed rental', which is the capital or principle divided by the lease period, 'variable rental' which is the profit calculated on the reducing/balance of the principal and 'supplementary' rental such as maintenance, fee, insurance, ownership tax etc.

The company will transfer title in the property to the customer either at the end of the lease period or at any time if he/she wishes to pre-pay provided that they

have paid the principal amount and profit in full, the website adds.

In June last year, the company had adopted a construction-linked payment plan as against its earlier policy of paying developers according to payment schedules as per sales and purchase agreements.

Alharmi  had said:  “The move will help safeguard customer interests and reduce their financial burden.

"Our overall liability will not reduce by switching over to construction-linked payment plan, it might just get delayed."

Last month, Amlak announced a loss of Dh2.7 million in the first quarter as impairment provisions for financing and investment assets more than halved to Dh31.3m. The company’s assets were valued at Dh13.9bn, including Dh729.6m in cash and balances with banks.

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