Islamic Products

Islamic Mortgage Guarantee Programme (MGP-𝙞 )

Islamic Mortgage Guarantee Programme (MGP-i)

What is MGP-𝙞 ?

  • It is a programme that provides guarantee on the Islamic house financing granted by an Islamic Financial Institutions (IFI) to its Customers.
  • It is undertaken by Cagamas SRP Berhad (CSRP), a wholly owned subsidiary of Cagamas Holdings Berhad that offers ‘first loss’ protection on an Islamic mortgage portfolio while the Islamic mortgage assets remain on the IFI’s books
  • The programme is formulated under Shariah principle of Kafalah and Wakalah

 

MGP-i
 

 

Product Features

  1. Product Description
    • CSRP will provide ‘first loss’ protection to mortgage originators in Malaysia on a portfolio basis. 
    • No individual financing can be taken out from the mortgage portfolio under protection other than, amongst others, in the case of redemption/prepayment in full or amortisation, which results in the outstanding principal balance falling below the protection threshold amount.
  2. Eligible Financing Type
    • Standardised and centralised guarantee programme offered to banks for Islamic mortgage financing.
    • Islamic residential mortgage financing complying with the standard Eligibility Criteria (EC).
  3. Guarantee Coverage
    • Current financing-to-value (FTV) ratio of the mortgaged property as at the guarantee date is not more than 95%.
    • Initial guarantee amount is the difference between the current financing amount and the protection threshold amount (e.g., 79.9% of mortgaged property value as at the guarantee ate).
    • The guarantee amount will reduce in accordance with the individual financing amortisation schedule which will be determined at the guarantee date.
    • The guarantee amount is the difference between the “scheduled” outstanding principal balance and the protection threshold.
  4. Termination of Protection

    Protection will be terminated upon:

    • The “scheduled “ outstanding principal balance of the financing falls below the protection threshold amount (e.g., 79.9% of the property value as at Guarantee Date) by way of payment/prepayment in full or financing amortisation.
    • Non-compliance with representation, warranty and eligibility criteria.
    • Payment of guarantee amount by CSRP to the originator.
  5. Guarantee fee
    • No guarantee fee for Islamic mortgage financing.
  6. Wakalah Fee
    • This fee is applicable for MGP-i.
    • Wakalah fee is either a one-off payment for the entire protection tenure or on an annual fee basis paid by the Originator.
  7. Eligibility Criteria
    • Financing Terms
      • Maximum outstanding principal balance as at the guarantee date
        -  Landed property:  RM2 million
        -  Non-landed property: RM0.7 million
      • Maximum current financing-to-value ratio as at the guarantee date is 95% 
      • Remaining financing tenure as at the guarantee date must not exceed 30 years
      • Minimum 12 month seasoning 
      • No past due over 1 month and no restructuring agreement in the 6-month period prior to the guarantee date
      • The financing is a term financing which fully amortised over the financing period. Financing with profit-only payment structure is not eligible
      • The financing is for the purchase or refinancing of a completed residential unit or for renovation of a residential unit 
    • Customers
      • Maximum debt-to-income ratio is 50% including all debts and based on gross approach calculation.
      • Full documentation is required for Income Proof
    • Property
      • Must be residential and completed property
      • The Mortgaged Property must be owner occupied 
      • The Mortgaged Property must have fire takaful coverage. Inclusion of additional perils in the fire takaful to cover for other serious damage is encouraged.
    • Legal Title and Documentation
      • The Originator must have title to the Mortgaged Property free from other encumbrances

 

Benefits

  • Transfers credit risk
  • Capital relief is based on BNM Risk Weighted Capital Adequacy Framework
  • Facilitates management of portfolio concentration risk
  • Improves Return on Risk Weighted Capital
  • Improves earning stability
  • Limits credit exposure to an acceptable level
  • Mortgage assets remain on the balance sheet

Business Enquiry

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