How To Get Your Money Back From Mcca

Transcription

1 Frequently Asked Questions Updated on 15 th May 2015 Disclaimer: Please refer to MCCA Disclaimer at MCCA Website. P a g e 1

2 Index 1. INVESTING IN MCCA INCOME FUND (INCOME FUND) What is the Income Fund? How much do I need to invest? Do my rate of returns change depending on how much money I invest? How long do I need to commit my money to the Fund? What happens if I need my money in the case of an emergency? Is there an establishment fee? Can I invest in the Fund if I am not an Australian citizen or Resident? If I can, how much tax will I pay? Do I need to disclose my Tax File Number (TFN) Number to MCCA IF? How do I make additional investments? How the profit is distributed to investors? Is there a Cooling-off Period? What are the benefits to the community of this fund? Can I invest my Self-Managed Super Fund (SMSF) in this Fund? How can I withdraw funds from MCCA Income Fund? SUPERANNUATION What is superannuation? How much super should my employer be contributing for me? Can I access my super before I retire? How can I find if I have lost super? What do you mean by investing in physical gold? Does MCCA First Guardian Super invest in fixed interest? What is the difference between other super funds and MCCA First Guardian Super? HOME FINANCE Amlak If I want to purchase a house, what is Ijara & Amlak? How does this work with MCCA? Tamleek What is Tamleek? What is Ijarah Muntahia Bittamleek and how can it be structured? What is the promise to lease concept? Steps of the promise to lease: Murabaha What is Murabaha? What is the procedure of Murabaha? SHARIAH PROPERTY FINANCE FAQ S What is the difference between Islamic home financing and a conventional mortgage loan? P a g e 2

3 4.2 Why does MCCA use rates (%), isn t this Haram? What is the difference between the shop s and Bank s rate of return? Are MCCA home finances really interest free? Is the funding source of MCCA acceptable from the Shariah point of view? Why does MCCA use the word interest in some contracts? Is Ijarah considered as two contracts in one? How is your Profit Rate calculated? Can profit rate be variable? GENERAL PROPERTY FINANCE FAQ S Would MCCA finance a Non Residents person? How can I sign the contract agreement while I am overseas? And what is required? Can I refinance at any time? What are the acceptable properties for finance? What is the nature of the contract from Shariah point of view? Do I need to have an account in an Australian Bank for the Direct Debit? Do I require an approval from the Australian Government prior to acquiring Real Estate in Australia? Do I need to provide Power Of Attorney (POA) in favour of an Australian resident? Would MCCA share any profit or loss as a result of selling the property? What is Mortgage Insurance or LMI? Can I re-finance my existing bank loans? Who can apply and obtain finance? Whose name will be registered on the title? What happens if I do not provide all the documents required? Who will provide the mortgage management services? Can the funder s insurer or funder ask me for further documents? What does a Pre-Approval mean? What happens if the property is valued at a lower amount than expected? What happens if the valuation report is not acceptable and I have conditional approval? When can I pay my 10% deposit? Will I be refunded for the valuation and finance processing fee if my application is not approved? What are the time frames for each step of the application process? What happens if I feel that my application is taking longer than the expected timeframes mentioned? Do you provide Construction finance? How long is my approval valid for? What do I do if it expires and I haven t found a property yet? When do I apply for my FHOGS? Can the rental facility fee change after I have signed my contract? What do I do if I want to change the finance amount after I have been approved? What is the maximum term for the Murabaha contract? Can I have a Murabaha in any State in Australia? Do MCCA offer finance for Commercial properties? Do MCCA offer personal finance? Do MCCA offer Finance for Property Development? Do you Give Finance for SMSF? P a g e 3

4 5.29 What are the differences between all MCCA property finance products? P a g e 4

5 1. Investing in MCCA Income Fund (Income Fund) 1.1 What is the Income Fund? The Income Fund is a Managed Investment Scheme registered with the Australian Securities and Investment Commission. The scheme can invest in residential and commercial mortgage facilities. The net profit of the scheme is distributed to investors every month. You must obtain and read the Product Disclosure Statement (PDS) issued for the Income Fund before investing. There are risks with this investment. Please refer to section 5 in the PDS. 1.2 How much do I need to invest? 500 Units is the minimum investment at $1 per Unit. The maximum Units can be invested under the Constitution is 10% of the total issued Units in the Fund. 1.3 Do my rate of returns change depending on how much money I invest? No. The rate of return from the Income Fund is the same regardless of whether you invest $1,000 or $1,000, How long do I need to commit my money to the Fund? The minimum term to invest in the Income Fund is for 6 months, after 6 months have passed the investors can redeem the Units (with 30 days notice) and the same applies to new investments. 1.5 What happens if I need my money in the case of an emergency? Under the Fund s Constitution, MCCA Asset Management is under no obligation to process requests for return of your funds prior to the expiry of the agreed term of the Investment Option chosen by you. However, MCCA Asset Management may, at its discretion and subject to the availability of new Investors to take your place or other available funds, consider withdrawal requests in special circumstances. There may be a fee charged for early withdrawal please refer to Section 4 titled Fees in the PDS. 1.6 Is there an establishment fee? No. There is no fee to open an investment. 1.7 Can I invest in the Fund if I am not an Australian citizen or Resident? If I can, how much tax will I pay? Persons who are not Australian citizens or residents are allowed to invest in registered managed investment schemes. They will need to provide suitable identification and complete all the other requirements outlined in the Product Disclosure Statement for the Income Fund. Persons who are not Australian Residents will, in most cases, only pay 10% of the profit earned as withholding tax. Please refer to a suitably qualified taxation accountant to advise you on the tax consequences of investing in the Income Fund. P a g e 5

6 1.8 Do I need to disclose my Tax File Number (TFN) Number to MCCA IF? You have the right not to disclose your TFN and we will withheld tax from your profit at the highest bracket. Please refer to a suitably qualified taxation accountant to advise you on the tax consequences of investing in the Income Fund. 1.9 How do I make additional investments? Following your initial application with the Fund you will be given a unique Unit-Holder Number and you can make additional investments electronically using the internet, telephone, or Bpay. Please call MCCA Asset Management on to find out how How the profit is distributed to investors? The distribution is credited to your account on the last day of the month. At the end of the month we calculate the net profit of the fund that can be distributed to the investors, each investor receive profit based on the daily weighted average balance of their investment in the fund Is there a Cooling-off Period? There is no cooling-off period 1.12 What are the benefits to the community of this fund? The more people that invest in this fund the greater the amount of funds that we have in order for us to be self-funding towards helping Muslims acquire residential properties in a Shariah compliant manner. This will allow us to greater serve our community in providing them with Shariah Compliant Finance solutions Can I invest my Self-Managed Super Fund (SMSF) in this Fund? Yes you can How can I withdraw funds from MCCA Income Fund? You need to fill a withdrawal Form that you can download from MCCA website and send it to our mailing address or scan and send via Superannuation 2.1 What is superannuation? Superannuation is a way to save for your retirement. The money comes from contributions made into your super fund by your employer and, ideally, topped up by your own money. 2.2 How much super should my employer be contributing for me? For most people, your employer should be paying 9.5% of your salary into your super fund. 2.3 Can I access my super before I retire? In order to access your superannuation benefit, you must meet a condition of release. These are as follows: P a g e 6

7 1. Permanent retirement from the workforce on or after your preservation age 2. Termination of employment after turning age Reaching age 65 (whether you are retired or not) 4. Permanent incapacity 5. Severe financial hardship 6. Compassionate grounds 7. Balance is below $ Permanent departure from Australia if you are an eligible temporary resident 9. Death 2.4 How can I find if I have lost super? The ATO website has a tool called SuperSeeker which helps with search. Ideally, MCCA staff will be able to assist with this and also help consolidate your funds into the MCCA First Guardian Super 2.5 What do you mean by investing in physical gold? A portion of your assets can be invested in physical gold. MCCA First Guardian Super invests in allocated physical gold and not unallocated. By allocated, this means dollar for dollar value of gold. 2.6 Does MCCA First Guardian Super invest in fixed interest? There is no fixed interest investment in the portfolio. This is substituted by Global infrastructure. Because we can t invest in fixed interest, we use high yielding global infrastructure asset companies to generate income earning assets. 2.7 What is the difference between other super funds and MCCA First Guardian Super? The key difference is that we invest in domestic and international equities on the customer s behalf and make sure that there is no dealing of any haram business involving alcohol, tobacco, pork, riba, military equipment, gambling or casino activities, etc. 3. Home Finance 3.1 Amlak If I want to purchase a house, what is Ijara & Amlak? How does this work with MCCA? Definition of Ijara: ljara is a Leasing agreement whereby a financial institution buys a property or asset for the customer and then leases it out to them over a specified period of time, thus earning profits for the financier by charging an agreed rent. The duration of the lease and the fee/rent are set in advance. During the period of the lease, the asset remains in the ownership of the financier, but the lessee has the right to use it until the expiry of the agreement period when the ownership of the property is transferred to the customer in the form of a promissory gift. P a g e 7

8 Amlak is an Ijara facility, the procedure for buying a property using Amlak is very straight forward and although the documentation is different to that used in a conventional mortgage; the process is in no way more complicated or time consuming than buying a property in any other way. 1. Key Attributes: There is only one contract 2. There is an appointment of MCCA as an Agent of the Funder 3. The Funder is the declared owner of the property How it works: 1. Potential clients approach us for assistance and complete an application form; 2. MCCA conducts a preliminary assessment on the financial serviceability; 3. After passing the preliminary assessment, MCCA issues you a conditional letter of approval of fund on behalf of the Funder; 4. You then identify the property you wish the Funder to buy who will in turn lease it to you; 5. You will enter into a lease agreement with the Funder which details your rights to occupy the property; 6. 0nce the property is purchased you will make monthly payments to the Funder, via a Direct Debit setup automatically from your nominated bank account; 7. You may purchase the property from the Funder at any time in the future by paying the outstanding finance, then the Funder will transfer the property title over to yourself in the form of a promissory gift (hiba). 8. If you choose to rent the property though-out the whole agreed period, with the last rental payment the Funder will transfer the property title over to yourself in the form of a promissory gift (hiba). 3.2 Tamleek What is Tamleek? Tamleek is a term of Islamic law which simply means ownership. The principle of Tamleek forms the basis of our home financing products to ensure that they are both Shariah complaint, and conform to all necessary Australian laws, in particular the National Consumer Credit Protection (NCCP) law What is Ijarah Muntahia Bittamleek and how can it be structured? Ijarah Muntahia Bittamleek (lease to own) is a mode of finance which is adopted by Islamic Financial Institutions. It is a contract where Islamic Financial Institution finances the property or equipments against mutual agreed rental installments that consists of profit and principle, where profit can be fixed or floated (variable) as agreed. At the end of the lease period ownership of property is transferred to the client with the last payment. Ijarah Muntahia Bittamleek can be structured by two ways: 1. The promise of the assigned Agent. 2. Sale of beneficial right and lease back. P a g e 8

9 3.2.3 What is the promise to lease concept? 1. The MCCA appoints the client as an agent on behalf of MCCA towards purchasing the property; 2. Agent promises to lease to own the property from MCCA; 3. The MCCA promises to lease the property to the agent so that the agent can own the property based on Ijara Muntahia Bittamleek; 4. Agency is built through Memorandum of Understanding; Steps of the promise to lease: 1. Potential client first applies for finance 2. MCCA assesses the client s (based on the criteria set by MCCA or the Funder) suitability for the product, and if eligible, provides a conditional approval of funding 3. Client will then search for a property within the approved funding amount and propose to MCCA to buy the property 4. MCCA evaluates the property and provides an approval subject to satisfactory evaluation, then assigns the client as an agent of MCCA 5. Upon approval agent finalises contract of sale with vendor through Real Estate Agent 6. Agent signs the agency contract with a promise to lease to own the property under the Tamleek contract according to Ijarah Muntahia Bittamleek (lease to own) with agreed rental instalments that consists of principle and profit, where the profit rate is variable or fixed for up to five years as agreed. 7. At the settlement MCCA becomes the owner of the property and permit the agent register his/her name on the title. 8. Upon payment of the moneys financed by MCCA, the agent re-assumes the rights from MCCA through the last rental instalment, where he/she become the full owner of the property. 3.3 Murabaha What is Murabaha? [ Murabahah is, in fact, a term of Islamic Fiqh and it refers to a particular kind of sale having nothing to do with financing in its original sense. If a seller agrees with his purchaser to provide him a specific commodity on a certain profit added to his cost, it is called a murabahah transaction. The basic ingredient of murabaha is that the seller discloses the actual cost he has incurred in acquiring the commodity, and then adds some profit thereon. This profit may be in lump sum or may be based on a percentage.] [Mufti Taqi Osmani] What is the procedure of Murabaha? 1. Potential client first applies for finance, 2. MCCA assesses the client s (based on the criteria set by MCCA or the Funder) suitability and provides a conditional approval if eligible and include him/her on the waiting list. 3. Client then finds a property and approaches MCCA again to buy it. 4. MCCA reassesses the client and valuate the property and assigns the client as an agent with a promise to purchase the property if valuation and eligibility are satisfactory. 5. Agent complete and signs contract of sale with the vendor through Real Estate Agent, 6. Then the agent completes and signs the agency contract with a promise to purchase and sign Murabaha contract. P a g e 9

10 4. Shariah property finance FAQ s 4.1 What is the difference between Islamic home financing and a conventional mortgage loan? Unlike a conventional mortgage where the client borrows money from a lender (Bank) which is then repaid with interest (Charging money over money), MCCA Shariah compliant Islamic finance is based upon the Islamic principle of Ijara (lease) or Murabaha (sale with profit) ljara is a leasing agreement whereby a financial institution buys a property for the customers and then leases it out to them over a specified period of time with an agreed rental payment consisting of the principal and profit. 4.2 Why does MCCA use rates (%), isn t this Haram? Here is an example to answer this question. If you buy one litre of milk for $1.20, and the shop owner bought the milk from a farmer for $1 - how much is the profit for the milk? The shop owner made a profit of $0.20 on the one litre of milk. If you express it as a rate of return then the profit is 20%. Now let s use another example, a banker gives someone $1 and gets back $ in this case rate of return for the banker is the same $0.20 or 20%. 4.3 What is the difference between the shop s and Bank s rate of return? Both the shop and Bank have a return of 20%, however one return is legitimate from the Islamic point of view, while the other is not. If the profit is from money-for-money like as for the conventional banks, then this 20% is riba. But the 20% profit from trade (money for commodity) is not riba. Allah (SWT) says, "That is because they say, Trade is [just] like interest. But Allah has permitted trade and has forbidden interest" Quran 2:175 Also, in Islam there are many things expressed via rates, for example, zakat which is 2.5% 4.4 Are MCCA home finances really interest free? Our financing product does not deal with interest. But interest free does not mean profit free. We make profit from leasing or selling property. 4.5 Is the funding source of MCCA acceptable from the Shariah point of view? There shall be no problem with the source of funding if the contract meets the Shariah requirements. It was also agreed that conventional banks and Riba based institutions can operate an Islamic finance window conditional that all contracts with the clients would be Shariah compliant. This model is now widely practised in both Muslim and non-muslim countries. It is important here to emphasise that all financial contracts must be free from Riba. It was confirmed that the Prophet (SAW) had financial dealing with non-muslims and he did not investigate the source of fund while borrowing from them. Therefore it is the method of dealing with money that is under scrutiny not the source of funds. P a g e 10

11 MCCA has formed important partnerships with private funders who agreed to provide unlimited funding for Shariah compliant contracts. The private funder s funders are non-banking Funders. 4.6 Why does MCCA use the word interest in some contracts? The inclusion of the term "interest" in contractual documentation is dictated by the legal advice issued by the legal counsel of the Funder. Often, there are different views to the permissibility of inclusion of the term "interest" in the financial contracts between legal advisors. MCCA's Shariah Advisors have agreed that the term "interest" in any documentation has the meaning of "profit". The Islamic legal maxim; Contracts dictates the determine principle of the meaning and purpose on the objective of the contract and not the words and expressions 4.7 Is Ijarah considered as two contracts in one? Abu Hurayrah (RA) related that the messenger of Allah (peace and blessings be on him) prohibited two sales in one sale. The expression two sales in one was explained to refer to holding a compensation (sale) and a gift (donation) in one without specifying the sale price or a man say I ll sell you this now for 100 and 150 deferred, however they separate without specifying what the purchaser requires. Such a transaction is prohibited since it involves Gharar (ambiguity/deception). The Ijarah Muntahia Bittamleek (lease to own) involves two types of contracts, namely leasing contract (ijarah), followed by sale contract (al-bai`). At the initial stage, the financial institution will conclude an ijarah agreement with the customer. Under this agreement, the financial institution will appoint the customer as an agent to purchase the property identified by the customer. Subsequently, the financial institution will lease the property to the customer for a specified period. Upon expiry of the lease period or early payments, the financial institution will conclude a sale of the property to the customer by two ways: 1. Last payment as a consideration for sale. 2. Gift, upon finalising all payments. MCCA uses the last payment method in Tamleek contracts and the gift method in Amlak Contracts. P a g e 11

12 4.8 How is your Profit Rate calculated? MCCA always endeavours to offer the most competitive rate possible for its clients. Profit Rate is determined based on the following factors: 1. Operating and management costs 2. Cost of funds It is to be emphasised that the reference rate is not an interest rate, nor a rental rate or lease rate. The rental instalment consists of principal & profit. payments could be made weekly, fortnightly or monthly. 4.9 Can profit rate be variable? The experts at the Accounting and Auditing Organisation of Islamic Financial Institutions (AAOIFI) approved that lease payments can be variable or fixed on the lease contract. For more information refer to the Shariah Lease Criteria and Lease to own part 1/2/5 and 3/2/5 by Accounting and Auditing Organisation of Islamic Financial Institutions. 5. General property finance FAQ s 5.1 Would MCCA finance a Non Residents person? For the purposes of this Underwriting Policy, a Non-resident is deemed to be any person without permanent residency status in Australia, and/or any person who resides and is employed in another country. Client: 1. Must be a High Net Worth Client with net surplus assets greater than $500, When calculating the net asset position, the inclusion of international assets such as stated real estate and/or investments is permitted. 3. Where one client is a citizen or permanent resident of Australia or New Zealand and the other client is a non-resident as per above definition, any proposal will be assessed under Standard LMI Underwriting Policy and not under the Non- Resident policy. 4. Non-resident Self-Employed, company or business borrowers are excluded 5. Standard income and employment policies are to apply. Acceptable income evidence must be translated into English and converted into Australian Dollars using the current exchange rate 6. A maximum of 90% of overseas income converted to Australian dollars may be used for serviceability purposes How can I sign the contract agreement while I am overseas? And what is required? Yes, an Independent adult witness can witness mortgage documents. However, other special requirements would be applicable subject to the relevant state regulations Can I refinance at any time? Yes, no early exit penalties would be applicable P a g e 12

13 5.1.3 What are the acceptable properties for finance? Foreign non-residents can invest in Australian real estate only by acquiring new dwellings, off-theplan properties under construction or yet to be built What is the nature of the contract from Shariah point of view? Our housing finance products are based on a lease arrangement that ends in ownership also known in the Islamic Finance industry as Ijarah Muntahiyya Bittamlik Do I need to have an account in an Australian Bank for the Direct Debit? Yes, successful applicants You Need to nominate an Australian bank account held in their name (s) where the finance instalments will be debited to Do I require an approval from the Australian Government prior to acquiring Real Estate in Australia? Yes, the Foreign Investment Review Board (the FIRB) will examine all investment proposals Do I need to provide Power Of Attorney (POA) in favour of an Australian resident? Foreign non-residents applicants will need to provide a limited Power Of Attorney (POA) in favour of an Australian resident. This POA gives the appointed attorney power to accept, on behalf of the applicant, any notices with regard to mortgage finance over the purchased/financed property. 5.2 Would MCCA share any profit or loss as a result of selling the property? The nature of the Ijarah and Murabaha contracts does not allow to share any profit or loss. 5.3 What is Mortgage Insurance or LMI? Lenders Mortgage Insurance is an industry standard facility which protects investors and funder s against loss. The cost of the Mortgage Insurance can be factored in the total finance facility. LMI is permissible from the Shariah point of view due to law of the land and by the law that the financier is protected for a high LVR (Loan to Value Ratio). 5.4 Can I re-finance my existing bank loans? Yes, we will be able to re-finance your mortgages from any bank. 5.5 Who can apply and obtain finance? Anyone, Muslim or non-muslim can apply for finance, but approval of funds is subject to meeting the assessment criteria. 5.6 Whose name will be registered on the title? The client name will be registered on the title. P a g e 13

14 5.7 What happens if I do not provide all the documents required? MCCA is not able to submit your application or proceed any further with your application if you don t provide all the required documentation. The information MCCA requests, is in fact mandatory information required to adequately assess the application to gain approval from the funder s insurers and funder. 5.8 Who will provide the mortgage management services? MCCA is an accredited Mortgage Manager. All services will be provided in-house. We are not a broker or an originator. 5.9 Can the funder s insurer or funder ask me for further documents? The funder s insurer or funder can at any time of the application process ask for any information that they deem is required to conform to their set guidelines What does a Pre-Approval mean? Initial approval process which provides an estimate of how much a potential client may receive (before finding the property), based on the information provided to MCCA What happens if the property is valued at a lower amount than expected? If the property does receive a lower than expected valuation, you may be required to provide a larger deposit for your application to be successful. The Sales executive will communicate the options opened to you with regards to whether the application can proceed or not What happens if the valuation report is not acceptable and I have conditional approval? If the valuation has been received and is not acceptable, as an individual applicant the conditional approval is still open to you however the funder s insurer and funder will not proceed with this current property that you wish to purchase or refinance as they deem it unsatisfactory in accordance with their guidelines When can I pay my 10% deposit? You may not pay the 10% deposit until you have received a formal approval letter from MCCA. This letter ensures that the finance application has been approved by all parties to the said finance facility Will I be refunded for the valuation and finance processing fee if my application is not approved? No, this is a fee that has to be paid for the services that the Funder and the Valuer has rendered on your behalf. The funder s insurers and funder need a valuation report to be able to assess your application. Paying for a valuation report or for finance processing fee does not mean an automatic approval What are the time frames for each step of the application process? Approval Stage 1. Application process time 3 business days 2. Funders Mortgage Insurance process time 3 business days 3. Valuation process time 3 business days 4. Funders processing time 3 business days Mortgage Documentation Stage P a g e 14

15 5. Mortgage Documentation preparation 2 days 6. Mortgage Documentation executed and returned 2 days (once received by solicitor) 7. Arrangement of settlement 10 days 5.16 What happens if I feel that my application is taking longer than the expected timeframes mentioned? Please feel free to discuss your finance application process with the local Branch Manager on Do you provide Construction finance? Yes How long is my approval valid for? Your conditional approval letter has an expiry date which will tell you how long your approval is valid for, in general it is for 90 days What do I do if it expires and I haven t found a property yet? The application needs to have all new updated documentation and be resubmitted to the various entities when you have found the said property When do I apply for my FHOGS? (First Home Owners Grant Scheme) This application must be provided to MCCA no later than 3 weeks prior to the matter settling Can the rental facility fee change after I have signed my contract? If the rental facility fee is variable then yes it can change What do I do if I want to change the finance amount after I have been approved? If you wish to change your financed amount, then you will need to amend your application to be reassessed again. This may require further documentation to be provided from you What is the maximum term for the Murabaha contract? The maximum term for Murabaha is 15 years only Can I have a Murabaha in any State in Australia? Murabaha is offered in Victoria only and not in any other states Do MCCA offer finance for Commercial properties? Yes, we offer finance for commercial properties from MCCA Income Fund Do MCCA offer personal finance? No 5.27 Do MCCA offer Finance for Property Development? Not at this time Do you Give Finance for SMSF? No. P a g e 15

16 5.29 What are the differences between all MCCA property finance products? Amlak Tamleek Tamleek (IF) Murabaha (IF) Funding Funder Funder MCCA Income MCCA Income Fund Fund Property Residential Residential Residential / Residential / Commercial Commercial Construction Yes Yes No No States All States All States All States Victoria Underlying Ijarah Ijarah Ijarah Murabaha Concept Term 30 Years 30 Years 30 Years 15 Years Rate Variable Variable/ Fixed Fixed and Fixed reviewed every year Break Cost No On Fixed rates No No only Documentation Rental Facility Rental Rate is Profit Rate Profit rate Rate expressed as Interest Employment Full time Only Full time / Self Employed Full time / Self Employed Full time / Self Employed Endorsed by Dr Ibrahim Salem Dr Ibrahim Salem Dr Ibrahim Salem Dr Ibrahim Salem Shariah Advisors Sh Wesam Zatiti Sh Shah Gul Saeed Dr Dawud Bakar Dr Dawud Bakar Dr Dawud Bakar P a g e 16