Real Estate Financing
34 terms in this category
Amortization Schedule
Schedule detailing monthly loan installments showing what's paid of principal and interest, helping borrower understand loan cost.
Balloon Payment
Large payment paid at end of loan term in addition to low monthly installments, used in some commercial loans.
Bridge Loan
Short-term loan bridging gap between buying new property and selling old, higher interest but flexible solution for investors.
Co-Borrower
Another person borrowing with original borrower, doubling considered income and increasing chances of obtaining loan, bearing full responsibility.
Construction Loan
Loan disbursed in installments per construction phases, converted to regular mortgage upon completion, designated for developers and owners.
Credit Bureau (Simah)
Saudi Credit Bureau, collecting credit data and providing banks with borrower reports, generating periodic reports.
Credit History
Person's previous credit dealings record, studied by bank before granting loan, late prior payments reduce chances of obtaining financing.
Credit Score
Numerical assessment of borrower's creditworthiness, issued by Simah in Saudi Arabia, higher means better chances for financing on favorable terms.
Debt-to-Income Ratio
Ratio of monthly obligations to income, max 65% in Saudi Arabia, determining borrower's repayment capacity, basis of financing decision.
Escrow Funds
Funds held by neutral third party until specific conditions met, common in major sale transactions, protecting both parties.
Fixed Rate
Interest rate not changing throughout loan term, providing stability for borrower in installments, usually slightly higher than variable.
Foreclosure
Legal procedure where financier seizes property upon borrower's default, done after specific legal procedures.
Home Equity Loan
Second loan guaranteed by same mortgaged property, used to obtain cash for project financing, requiring sufficient property value.
Ijara
Islamic financing formula where customer leases property from bank with promise of ownership at end, similar to lease-to-own.
Interest Rate
Borrowing cost as annual percentage, set by central banks, directly affecting mortgage installments and people's purchasing capacity.
Islamic Financing
Sharia-compliant real estate financing without usurious interest, using formulas like Murabaha and Ijara, common in Saudi Arabia and Gulf.
Loan Application
Official form submitted by loan applicant to bank, containing personal and financial info, determining borrower's eligibility, requiring attached documents.
Loan Default
Borrower's failure to repay loan installments on time, requiring reminders then legal procedures, may lead to property foreclosure.
Loan Modification
Changing existing loan terms to facilitate repayment, like extending term or reducing installment, occurs during borrower's financial difficulties.
Loan Tenure
Time period for mortgage repayment, ranging from 5 to 30 years, longer reduces monthly installment but raises total cost.
Loan-to-Value (LTV)
Ratio of loan to property value, max 90% for Saudi citizens, higher means greater risk for bank and lower down payment.
Mortgage Escrow Account
Account collecting part of installment to pay property costs like insurance and taxes, ensuring payment of obligations on time.
Mortgage Installment
Amount borrower pays monthly to repay mortgage loan, composed of part of principal and part of interest or profit.
Mortgage Insurance
Insurance protecting bank from borrower default, imposed when loan-to-value ratio high, added to monthly installment.
Mortgage Rate
Percentage of interest or profit on mortgage, fundamental factor in total loan cost, affected by interest rate.
Murabaha
Islamic financing formula where bank buys property then sells to customer at agreed profit, paid in installments, most famous in real estate financing.
Musharaka
Partnership between bank and customer in property ownership, customer gradually pays bank until full property ownership, Islamic formula.
Pre-Approval
Bank's evaluation of borrower's loan eligibility before property selection, determining loan ceiling, facilitating negotiations with seller.
Prepayment Penalty
Fees imposed on borrower if loan repaid before due date, compensating bank for lost interest, lower in Islamic loans.
Real Estate Finance
Banking activity to finance buying or building real estate, greatly grew in Saudi Arabia with Vision 2030 and ownership support policies.
Real Estate Insurance
Comprehensive insurance against risks affecting property like fires and theft, mandatory for financed properties, protecting asset value.
Real Estate Mortgage
Long-term loan to buy property guaranteed by property itself, paid in monthly installments, most common in housing finance.
Refinancing
Replacing current loan with new one with better terms like lower interest rate, improving cash flow and saving money for borrower.
Variable Rate
Interest rate changing with reference interest rate change, lower than fixed initially but more risky long-term.
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Disputes & Resolution
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