Al Baraka Bank Mortgage as of February 2025
Apply for a Al Baraka Bank Mortgage Loan, reviewed by our experts. As of 17.02.2025, you have access to loan options. Increase your chances of approval by completing an online application and getting a free credit rating check.
Update 13.11.2024
Al Baraka Bank Mortgages: competitive rates and offers

Al Baraka Bank’s Residential Finance provides Shariah-compliant mortgage solutions tailored for property purchases, refinancing, and investment. These options, based on profit-sharing instead of traditional interest, offer clients flexible terms, competitive profit rates starting at 10.25%, and repayment periods from 3 to 30 years. Programs are designed to accommodate first-time homebuyers, refinancing needs, and bond-switching, aligning with Islamic values while delivering adaptable, customer-focused financing.

Types of Al Baraka Bank Home Finance

Key Features

  • Flexible Repayment Terms. Al Baraka Bank offers repayment terms of up to 30 years for first-time home purchases, making it accessible for various financial situations.

  • Shariah-Compliant Financing. All mortgage options are based on Islamic financing principles, specifically Musharaka (partnership-based) structures, providing ethical finance alternatives without interest-based components.

  • No Monthly Administration Fees. Al Baraka mortgages come with the benefit of no monthly administration fees, helping clients save on recurring costs associated with traditional loan management.

  • Fixed Profit Rate with Annual Review. The initial 12-month period features a fixed profit rate, with an annual review thereafter, offering predictability in payments while allowing for flexibility over time.

  • Early Settlement Flexibility. Clients can settle their mortgage early without penalties, supporting financial freedom and flexibility in repayment.

  • Discounted Bond Registration Fees. Al Baraka Bank offers reduced fees for bond registration through participating attorneys, providing savings on initial costs associated with property financing.

Pros and Cons

Pros 

Cons

How to Get an Al Baraka Bank Home Finance?

  1. Evaluate Your Finances. Assess income, expenses, and debts to ensure monthly payments fit your budget. Use available tools or consult with Al Baraka for assistance.

  2. Explore Home Finance Options. Review Al Baraka’s Shariah-compliant products like Musharaka or Ijara to find the best match for your needs and property type.

  3. Consult with a Home Finance Specialist. Speak to an Al Baraka consultant for tailored advice on mortgage options, required documents, and terms suited to your profile.

  4. Gather Required Documents. Prepare income proof, bank statements, ID, and additional documents specific to Shariah financing. Ensure everything is complete to avoid delays.

  5. Request Pre-Qualification. Obtain a pre-qualification to understand your eligibility and approximate financing range before fully applying.

  6. Submit Full Application. Complete your application at a branch or online, providing all required details and documents.

  7. Credit and Document Assessment. Al Baraka will verify your financial stability and credit profile as part of the partnership basis for financing approval.

  8. Property Valuation and Agreement. After property valuation, finalize the financing agreement, detailing terms and responsibilities under Shariah principles.

  9. Sign and Register. Sign the legal documentation to formalize the financing, and Al Baraka will register property or lease terms.

  10. Fund Disbursement. Upon registration, Al Baraka releases funds directly to the seller or developer, completing the mortgage process.

Requirements and Conditions

Requirements

Conditions

Ways to Receive the Money 

How to Repay Al Baraka Bank Home Finance? 

Things to Pay Attention to

  • Interest Rate Terms. Review the profit rate offered, which ranges from 10.25% to 20%, based on your credit profile and deposit amount. Understanding how this rate is structured and any factors that may adjust it over time will help you forecast your repayment costs accurately.

  • Loan-to-Value (LTV) Ratio. Al Baraka Bank requires a minimum deposit of 10% and allows financing up to 90% of the property’s purchase price. This ratio impacts the initial cash you need, so be prepared with funds for the deposit and understand how your LTV ratio affects your loan's terms.

  • Monthly Payment Amount. Ensure the monthly installment amount is affordable within your budget. This will depend on the profit rate, loan amount, and term length, which can extend up to 30 years. Calculate whether the installment is manageable alongside your other financial obligations.

  • Credit History. A strong credit record can help you secure a more favorable profit rate. Check your credit score in advance and address any issues, as Al Baraka will assess your credit profile to determine eligibility and rate offers.

  • Documentation Requirements. Prepare the full documentation, including proof of income (e.g., recent salary slips or financial statements), identification, and proof of South African residency. Self-employed applicants will need additional documentation, such as tax certificates and bank statements, to demonstrate financial stability.

  • Prepayment and Repayment Flexibility. Understand the options for additional lump-sum payments or prepayments without penalties. Annual lump-sum prepayment options are available, and making use of these can reduce the total profit cost over the loan term.

  • Associated Fees and Costs. Be aware of the initial costs such as the transfer cost of R24,809, bond registration cost of R22,900, and an initiation fee of R6,037.50. Factor these into your budget as they will add to the upfront cost of securing the mortgage.

Editorial Opinion

Al Baraka Bank’s Residential Finance provides a flexible, Shariah-compliant mortgage with competitive profit rates, repayment terms of up to 30 years, and no penalties for early settlement, making it a solid choice for clients seeking ethical financing. Key benefits include the absence of monthly fees and discounted registration costs, though the annual rate review could lead to increased payments over time. Clients must also prepare for a detailed financial assessment, which may extend the application process. With its adaptable terms and focus on ethical principles, Al Baraka Bank offers a valuable alternative, but clients should be mindful of potential rate adjustments and upfront costs.

Additional Resources

Sources

FAQ

Does Al Baraka Bank offer Residential Finance options for non-residents or individuals on temporary work visas in South Africa?

Can Al Baraka Bank clients include co-applicants on their Residential Finance application, and if so, how might this affect eligibility?

Does Al Baraka Bank offer any insurance options with its Residential Finance products to protect against default or financial hardships?

Can clients refinance their Al Baraka Bank Residential Finance product if their financial situation improves or if they wish to adjust payment structures?

Are there benefits or incentives for clients making early or larger-than-required payments on their Residential Finance?

13.11.2024
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Update 13.11.2024

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