- Mortgage finance Law 148/2001 was issued in 2001. Rules and regulations were enforced in 2003.
- Mortgage finance is a long-term funding system enabling clients to purchase and own residential, commercial, or administrative units, applying long-term installment program up to 20 years.
- Mortgagor pays 10% as down payment from unit appraised value or selling value, whichever is lesser. The mortgagee finances the 90% of remaining value.
Registered unit, unit eligible for registration, or allocated unit is the collateral. The Law entitles the mortgagee to require other further collaterals.
All mortgage companies report to the Egyptian Financial Supervisory Authority (EFSA), while banks offering mortgage finance report to the Central Bank of Egypt (CBE).
Yes, provided that total installments are no more than 40% of your monthly income.
This is against Law 148/2001 stating that contract must be tripartite; i.e. seller, mortgagor and mortgagee.
Units owned through either of the following ways:
- Registered unit: unit has its registered contract which is serialized in registration office (unit-specific contract).
- Unit eligible for registration: land of building is registered in registration office & serialized.
- Villa/ Unit in a building on allocated land: allocated lands are in the new urban communities such as New Cairo, Sixth of October & Sheikh Zayed.
- Whole building on allocated land
A registered unit has a deed known as the green contract which has a registration number. The deed may include selected unit/ units including the unit required to be mortgaged. In this case, the unit required to be mortgaged must be limited by 4 borders stated in the beginning of the registered contract, which will be the seller’s ownership deed. Unit share in land possession should be mentioned too in the deed.
Unit is part of a building on registered land by virtue of a registered deed. In this case, seller’s deed is a registered contract of the land on which the building exists, where the unit required for mortgage lies, besides official construction license certified from the issuing authority, provided that the unit required to be mortgaged is part of the licensed floors.
Units located in new urban communities (such as New Cairo and Sixth of October) and built on land purchased/ allocated by city administrative authority or the New Urban Communities Agency.
- Preliminary contract
- Land allocation note from an agency affiliated with the New Urban Communities Agency
- Official construction license approved by the city administrative authority
- Land delivery note.
- Financial and construction status.
Chain of Title is a document that shows purchasing and selling transactions on a unit since it has been built.
Yes, touristic residential units (such as those located in North Coast, Ain Sokhna, or Hurgada) on condition of checking following documents:
- Land allocation contract
- Land delivery report
- Copy of authenticated layout
- Copy of authenticated geometrical drawings
- Financial & construction status.
Law gives right to mortgagor to accept any other collateral such as:
- Propose another registered unit owned by client or any other person as alternative collateral provided that collateral unit value is equal to required mortgage value (as per appraisal report).
- Propose bank deposits as alternative collateral provided that collateral value is equal to mortgage value and to be pledged in favor of mortgagee along finance tenor.
The property will be registered in the client’s name (mortgagor) after signing the finance contract immediately, and mortgagee will impose a unit lien throughout mortgage tenor.
After signing the tripartite contract, the contract date will be registered in registration office; that is the first step of maintaining buyer’s right to mortgaged unit. Other processes will take place after that, such as going through registration process for mortgagor (client) then lien is removed by mortgagee. Mortgagee undertakes such procedures on behalf of the client by a power of proxy.
The tripartite contract is a template set by EFSA. The contract parties are :
- Buyer (mortgagor/ investor)
Mortgage value, installment values, mortgage tenor, and appraised unit value are stated.
Yes. E.g. rents, deposits, pension… etc.)
- E.g. father, mother, siblings, husband, wife… etc. provided that income documents and IDs are submitted for each of them individually.
- Unit deed in this case will be in the names of all mortgagors (partners to mortgage).
Yes, on condition that client meets some requirements for foreigners’ ownership of property and unoccupied lands in Egypt as per the law.
Yes, on condition that the end of mortgage tenor is by client’s becoming sixty-five years of age.
- Mortgagee registers tripartite contract date in Real Estate Registry, the first step to save mortgagor’s rights to mortgaged unit.
- Proceeding with registration procedures and unit lien.
- Choosing the suitable unit
- Calculating the required down-payment, mortgage amount & monthly premium
- Filling-in mortgage finance request application, attaching required income & unit documents
- Paying processing fees (application/ appraisal/ legal fees)
- Printing credit report through I-Score to have credit approval
- Internal procedures: examining the legal and credit documents; investigation and insurance process, then appraising unit.
- Signing the power of attorneys, tripartite agreement, and any other required disbursement documents.
Yes, AAIMF can accept a power of attorney, but its drafting must be approved by AAIMF’s Legal Department. On the other hand, the client must sign investigation authorization and installment checks in person.
The monthly installment cannot exceed 40% of the client’s total income.
The completion period in AAIMF does not exceed 5 days after submitting all required documents.
Bank checks are signed so that mortgagee can collect premiums as per agreement with mortgagor.
Yes, but it only applies when income documents allow for the required method.
In case of partial anticipated payment, client opts for modifying monthly premiums or mortgage tenor.
AAIMF assigns an EFSA-certified evaluator to appraise the property to assure the client as well as the mortgage company that the property value is the actual market price since the property is the main collateral. Accordingly, mortgagee incurs valuation report on unit market price in order to uphold the rights of both parties to contract: mortgagor and mortgagee.
When mortgage finance is disbursed, insurance of the following takes place:
- Life insurance against death or incapacitation of mortgagor: Insurance company is committed to covering leftover loan amount (in case of death or incapacitation). Inheritors will acquire unit with no liabilities.
- Fire insurance of property: Insurance company is committed to covering losses according to inspection in case unit is exposed to fire.
Life and unit insurance premiums are added to the monthly installment throughout tenor.