The new product is aimed at both Muslim and non-Muslim homeowners who are looking to refinance their properties, and first-time homeowners of completed properties.
The new Citibank Home Partner-i is a Syariah-compliant home financing facility based on the concept of ‘Diminishing Musyarakah.’ Unlike the local concept of Bai Bithaman Ajil, Diminishing Musyarakah is essentially a co-ownership agreement between the bank and the customer, and has more universal acceptability in the Islamic world.
A distinctive feature of the Citibank Home Partner-i is that it is based on a floating rate (BFR) with the added protection of a rate cap. This means that customers will enjoy savings benefits when the BFR is low, but in the event that the BFR rises, the customer is protected by the capped rate. If the BFR rises beyond the capped rate, the customers’ monthly payments will still be calculated based on the capped rate.
In addition, the product allows customers to make flexible payments to maximize on their savings. Early or extra payments can be made in any amount, at any time, without notice. Based on the compassionate Syariah code of ethics, there is no interest on interest for late payments, unlike conventional loans, and the takaful coverage offers annual profit distribution should there be ‘no claims’ made during the insured period.
