Dr. Rina had submitted an application (as a sole applicant) to Al-Amin Bank (AAB), an Islamic subsidiary of a foreign bank for a home financing facility to finance the purchase of a semi-detached house that costs RM736,500. She applied for 90% margin of financing and payment period up to 25 years (Maximum eligible age is 70 years). The difference between the purchase price and the financing amount will be paid from her savings. The profit rate charged by AAB for the home financing is 5.0%

p.a. under the Shariah contract of Ijarah Muntahia Bi al-Tamlik (IMBT) which use the constant rate of return (CRR) computation method.

Her financial background is as follows:

Description	Amount (RM)
Income:
Gross monthly salary	8,000
Fixed allowance	1,000
Variable Income: Entertainment allowance Travelling claims Non-contractual bonus	400 500 24,000 (per annum)
Statutory deductions:
Pension funds contribution	800
Zakat & income tax deductions	1100
Social security contribution	100
Others	0
Existing Monthly Outstanding Financial Obligations:
Home financing instalment	1000
Vehicle financing instalment	800
Average credit card payment	500
Average other debt payment	200

Datuk Kamal draws a monthly retirement pension amounting to RM9,000. After deducting his car financing and other debts, his net disposal pension income is RM5,000.

Required:

a) Based on the above information, compute the following which will be used to determine Dr. Rina’s affordability to pay the instalment for bank home financing:

i) Monthly instalment for the home financing amount as requested by Dr. Rina. (please use the annuity table as given in Appendix for computation).

ii) Her estimated gross monthly income (including variable and other income) and the proportionate monthly non-contractual bonus.

iii) Her net monthly income after the statutory deductions.

iv) Total monthly outstanding financial obligation (including new monthly instalment).

v) Her Debt Service Coverage Ratio (DSR) (Note: the bank’s internal policy only allows the maximum acceptable DSR of 60%).

b) What are other alternatives available to Dr. Rina that you could recommend if she is not qualified for the above application in order not to miss this financing potential in building your customer-base?

c) The above needs by Dr. Rina and Datuk Kamal are common based on the household life cycle. What would be other pertinent factors that may influence the household requirements and their financial needs?