It is possible to refinance Investment Property Refinancing in a much smoother and simpler way, as the rates on mortgages are as low as they are on record.
It is what has made many homeowners look forward to refinancing if you want to join them, you must be sure that you are sufficiently familiar with this process.
Before you start working on real estate refinancing, you must consider the amount that you can save, as refinancing can help you reach all the financial goals that you want to achieve.
Through this article, we will talk about refinancing real estate in the form of investment, and everything related to it.
Investment Property Refinancing
The refinancing of Investment Property Refinancing is a loan that qualifies to purchase a specific real estate, including a house for housing,
office, or investment building.
During real estate financing, the amount of the beneficiary is placed so that it is possible to work on paying it to the financing party,
which is in the form of installments.
Also, the agreement is made in advance on the number of these circles, and what is the value of each of these installments, and it also contains a certain rate of profit or interest.
One of the most important points in this concept is that the property has been registered with the notary,
or that its ownership is known by the purchase and financing process.
What are the types of real estate financing?
Many types of real estate financing are great,
but among the most famous and important of these types are the following:
First: Ijarah financing, Investment Property Refinancing
This means that the bank or any financier works to buy the property and then works to lease it to the customer and after the end of the contract period,
the customer has owned the property, meaning that with the last payment he made, the property became the property of the buyer.
In this type, the percentage that is paid is not fixed, but rather it can be variable, that is, the rate of that interest may decrease or increase,
and accordingly, the value of those monthly installments may also decrease or increase.
Ijara financing is a type of refinancing of investment properties,
which means that this property remains owned by the bank or the owner of the financing, throughout paying those installments from the buyer.
This means that the property may be among the financier’s responsibilities in the event of any dependencies or repairs during the contracting period until the buyer owns it.
The most important problems of leasing financing:
There is no fixed interest, as its installments are variable throughout the contract period.
The financier has the right to withdraw the property during the lease period
if the buyer fails to pay the expenses.
Second: Murabaha financing
The concept of Murabaha financing is that the financing person or the bank, for example, works to sell the property completely to the buyer,
in addition to adding a reasonable profit, and the property is in the name of the buyer,
not in the name of the financing person.
One of the most important advantages of Murabaha financing is that the interest rate is fixed,
in addition to the fact that the installments are also fixed during the period that was agreed upon within the refinancing of investment properties.
If the buyer fails to pay the installments for the property,
it is possible to sell the building, and the buyer can benefit from the profit resulting from the sale price.
This type of financing is the one that can differ for each country or each bank,
so the buyer must ask about that at the beginning to know what the method is before starting it.
Third: Participation financing
The concept of financing by participation within the refinancing of investment real estate is that the buyer and the financier participate in the purchase of the property,
as the bank initially works to buy the property or the entire house,
and then the buyer buys a share of the house every period
and after he has purchased all Equity then this house becomes his wholly owned.
What are the conditions for refinancing Investment Property Refinancing?
Many conditions are specific to the refinancing of investment properties,
whose provisions may be similar to those of many Arab countries,
which are represented in the following points:
Firstly
The age of individuals who are eligible for financing must be around 21 years old or more.
secondly
Also, the last section of this financing must be that the age of the buyer is less than 65 if you work within the government sector,
or the age of 701 years if you work on your account.
Third
He must have sufficient income to obtain real estate financing,
to be able to pay the value of the installment that is specified,
which is currently 65% of the value of the income,
which can be more or less than some agencies. For financing,
which is based on the customer’s income and also the central bank’s policy.
Fourthly
The buyer must work to pay a rate of about 5% of the total price of the property,
which is done at the beginning as a first payment of the price of the property,
which some of the programs may bypass,
as this condition supports some of the groups who wish to own a property for housing.
Fifth
If the buyer is married and his wife also works,
it is permissible to bring together the two parties to increase the value of real estate financing,
which may be called financing through solidarity.
When dealing with the expert or the person responsible for evaluating the property.
It is necessary to ensure that they are registered and accredited by the regulatory authorities within the country, in which the investment is being made,
to avoid occupation or fraud.
Read more: The Green Mortgage Revolution: Financing Sustainable Homes
Sixthly
The buyer may agree to have the financier dispose of the property he bought,
whether through rent, sale, or giving it as a gift, all after the financier’s approval.
Refinancing investment properties is a golden opportunity for everyone who wants to acquire a property, as he can get it at today’s price but pay his money in the future.
Therefore, you must be aware of all the details that are related to real estate financing before embarking on it,
as it is, in a nutshell, a debt for a long period,
which needs a long period to be repaid.