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14 April 2024

National bonds can be used as collateral

By Rami Eljundi


Holders of National Bonds will henceforth be able to use their bonds as collateral to secure a mortgage worth up to 100 per cent of the bonds’ value, it was announced yesterday.

“Bonds can be used instead of a down payment and will either be redeemed as the final mortgage payment or released to the bondholder upon full payment of the financed amount,” said Mohamed Qasim Al Ali, deputy chief executive of National Bonds Corporation.

“It is an innovative way to make people keep their saving and providing them the opportunity to utilise the savings to fulfil their dreams.”

The partnership between National Bonds and Amlak allows savers to use their bonds for two purposes – as a savings scheme and as collateral to buy a property, said Al Ali. He said bondholders might apply this scheme to other consumer goods later in the future.

Arif Alharmi, CEO of Amlak, said: “It is a win-win situation. The term of financing may range from five to 25 years, which may depend on the buyer’s age, profession and income, and once a bondholder pay the agreed upon amount of bonds to cover his down payment for a property, the bonds will be kept during the agreed financing period and there will be profit.”

“If the property buyer gets behind on a payment or can not keep up with the payments, we will find a way to reach a mutual understanding while his held down payment is being invested,” he said. It could be the buyer’s option to re-sell the property at the end.

Bondholders will gain their annual returns on their down payment and they will be eligible to enter the National Bonds monthly prize withdraw during their signed financing period.