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A Caring mortgage?
We often receive this question. To put it simply, a product referred to as a “mortgage” is unlikely to be lawful. The term “mortgage” originates from two Latin words that translate to “death pledge,” which doesn’t sound very appealing, does it? This is precisely why we offer a more ethical and compliant alternative, Dinarly Home Provision Model.
Partner's, in it together.
The Dinarly Home Provision Model is set up as a co-ownership agreement, making us partners. Since we’re in it together, we champion flexibility and true risk sharing in our partnership.
Here are some more reasons our mortgage alternative remains halal and ethical:
Debt-free
Since you are under no obligation to purchase our share of the property from us this means there is no debt. This also means no early or late repayment fees ever for not purchasing equity.
Not pegged to interest
The rent we charge does not relate to macroeconomic indicators such as interest rates. Instead, it is determined by a number of factors including the local rental market, with annual rent reviews capped to reduce uncertainty.
Affordability
Since we sell you the property at the original purchase price, and not at the current market value, and provide rental discounts (unlike other shared ownership schemes), we do our best to make sure it remains affordable for you.
True risk sharing
In case of a loss, or shortfall upon sale, proceeds are split according to respective partnership share. In comparison, traditionally, a bank has the first call on proceeds and the homebuyer may end up with nothing upon foreclosure.
Ultimate flexibility
We’ve tailored our tech to give you control over managing your Pfida home journey through your account dashboard. You can change your target equity payment when you need to or opt to pay rent only in any given month.
Your equity, your choice
Our product reduces the risk of foreclosure by introducing an equity buffer. This allows you to pay us in equity if you cannot afford your rent. You can then purchase it back again once you are able to, in your own time.
Interest vs. Rent – what’s the difference?
Fair question, we get asked this one a lot too, along with ‘Is interest hidden by the rent?’ Consider these two situations:
Scenario 1
- You approach a lender and borrow ₹5,00,000
- You have agreed to pay this back within one year, you now owe debt
- For each day this debt is outstanding, the lender charges you a percentage as their profit; this is interest
Scenario 2
- You and your friend agree to purchase a car together for ₹10,00,000 each. Both of you are equal co-owners
- Your friend does not use the car though, so offers it to you to use exclusively in exchange for rent on their portion
- You are not contractually obliged to pay for your friend’s share, you are simply paying for the use of the portion of the car that you do not own. As there is no contract to pay it back, you do not have the burden of debt
So what’s the difference?
In the first scenario, you have entered a contract to pay the lender back within a set period of time, along with an extra charge as interest during the time this amount is outstanding.
In the second scenario, you are paying rent on an item that you own a portion of.
If you had a contractual obligation to purchase your friend’s share, this agreement would have been considered a debt, making your ‘rent’ equivalent to interest.
Our Home Provision Model works similarly to Scenario 2, there is no contractual obligation in place for you to pay us for our share of the property. You have ultimate flexibility and can choose to pay rent only in any given month, along with how much you want to pay towards purchasing your equity.
Our agreements do set a finance term in place. This is a preferred timeline set by you, in order to become the owner of the property. This finance term will suggest a target monthly amount that includes rent and equity which will help you reach your goal. Since you have complete flexibility over if and how you purchase more equity of the property, this is not a contractual obligation. Find out more about finance terms.
Phew, that was a lot of information! At the end of the day, our goal is to help you reach your goal of owning a home in a lawful way.
Join the waiting list for home finance.
By registering an account, we’ll automatically add you to the public waiting list for home finance. The initial equity contribution (deposit) from you. We recommend 10% to all our customers, but we do accept 5% as your initial equity contribution.
Your wait time is dependent on a number of factors, such as how much deposit you have, how much finance you need and your affordability. You can tell us this information by completing the finance requirements form after registering your account.
