At some point in your life, you will become confident about the importance of owning your own home! You may feel that the path to achieving this goal is a bit challenging and complicated! However, at Homes Jordan, we strive with you to achieve your dream of owning your home or any other property you desire. Therefore, we are continuously keen on providing the best real estate services through a team of expert consultants in engineering and real estate, in addition to expanding the knowledge base related to real estate matters and what contributes to realizing your dream of owning your home and facilitating any complications you may encounter along the way. Today, we will talk about types of real estate financing and the most common questions related to obtaining real estate financing.
Real estate financing is a process between two parties: the lender and the borrower, aimed at achieving a specific real estate goal, such as building, purchasing, improving, or renovating a property. Real estate financing has many types and covers various real estate sectors, including residential, commercial, and real estate development.
There are several types of real estate financing, including the following:
Lease Financing : The lender purchases the property and rents it to the borrower.
Cost-Plus Financing : The lender purchases the property and sells it to the borrower with a profit margin.
Partnership Financing with Ownership Transfer: The lender and borrower jointly finance the property, and then the property is rented to the borrower.
In the following sections, we will discuss these types of real estate financing in detail.
Parties Involved: Lender (Party 1), Borrower (Party 2)
Nature of Lease Financing: The lender purchases the property and rents it to the borrower.
Goal of Lease Financing: The borrower will own the property once the final payment is made.
Interest Rate: Variable (can increase or decrease).
Monthly Installment Amount: Variable, depending on the interest rate.
Parties Involved: Lender (Party 1), Borrower (Party 2)
Nature of Cost-Plus Financing: The lender purchases the property and sells it to the borrower with a fixed profit margin.
Goal of Cost-Plus Financing: The property is registered in the borrower’s name immediately with a known profit margin, which is agreed upon.
Interest Rate: Fixed.
Monthly Installment Amount: Fixed.
Parties Involved: The lender (bank) and the borrower (purchaser).
Nature of Partnership Financing with Ownership Transfer: The bank fully purchases the property, and then the borrower gradually buys the bank’s share over a long period, with the property being rented by the borrower until the entire rental amount is paid.
Goal of Partnership Financing with Ownership Transfer: The property will fully belong to the borrower after completing all payments.
Note on Interest: In partnership financing with ownership transfer, the borrower rents the property from the bank, and as their share in the property increases, the property is revalued, leading to a decrease in the rental amount.
The goal is the same: both aim to allow an individual to own a property. However, in terms of terminology, "financing" is a broader term than a "loan." While both real estate financing and mortgage loans achieve the same goal, there are many who mistakenly believe there are significant differences between them.
Yes, there are conditions to ensure the rights of both the lender and the borrower. You can find more information about the conditions of mortgage loans in our article on the requirements for granting mortgage loans.
Additionally, we at Homes Jordan have discussed important topics related to real estate financing, which you can access by clicking here: "What Are the Key Differences Between Housing Loans and Leasing Financing?"
Yes, they can. Jordanian law allows non-Jordanian foreigners to own property in Jordan under certain conditions, the most important of which is the presence of the individual or a licensed agent or a licensed real estate office. Approval from the Ministry of Interior, the Cabinet, and the Ministry of Finance is also required.
Mortgage loans, however, have specific conditions that vary from bank to bank, but the following are common for all banks for non-Jordanian foreigners:
After briefly reviewing the types of real estate financing, let's explore the most common questions about real estate financing.
Yes, there is a difference. Real estate financing involves providing money to the client to acquire a property, such as for buying, building, or renovating. On the other hand, a mortgage loan involves the property owner pledging their property to a lender, such as a bank, in exchange for a sum of money. The property is returned once the amount is fully repaid.
No, you cannot. All procedures related to real estate financing are specifically aimed at purchasing property in cooperation with the financing institutions and the land department.
No, the property remains mortgaged to the lender until the full repayment is made, according to the agreed payment period and amount stated in the contract.
Although there are different types of real estate financing, the solution in cases of default is generally the same for all types: the lender has the right to seize the property if the borrower defaults. After exhausting all attempts to resolve the issue, the property will be sold, and the lender recovers the amount owed.
Banks are among the largest institutions involved in real estate financing.
Homes Jordan has multiple partnerships with some of the most prominent banks in Jordan, such as Al Rajhi Bank, Safwa Islamic Bank, Arab Investment Bank, Union Bank, Capital Bank, Jordan Ahli Bank, and Arab Islamic International Bank. These banks offer real estate financing based on the client's qualifications. Homes Jordan also provides services for completing all property registration procedures in cooperation with the Land and Survey Department.
You can learn more about the services offered by Homes Jordan by reading our article "Why Choose Homes Jordan." Feel free to contact our team and consultants at Homes Jordan for the best advice and services.
All rights to this article are reserved by Homes Jordan website 2024.
This article was written by the Homes Jordan team.
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