The Effect of Location, Building Quality, Developer Quality, and Service Quality On Home Ownership With Bank Tabungan Negara Syariah KCS Banda Aceh KPR Financing As The Mediating Variable

Abstract

This study aims to examine the influence of location, building quality, developer quality, and service quality on mortgage purchasing decisions at Bank Tabungan Negara Syariah KCS Banda Aceh with financing as a mediating variable. In this study, the population was all mortgage financing customers of Bank Tabungan Negara Syariah. The sample was 200 customers. Data analysis in this study used the Structural Equation Modeling (SEM) method. The results showed that location, building quality, developer quality, service quality, financing, and purchasing decisions at Bank Tabungan Negara Syariah KCS Banda Aceh were good. Furthermore, it was found that location, building quality, developer quality, and service quality influenced financing. Location, service quality, developer quality, and financing influenced purchasing decisions. While building quality did not influence purchasing decisions. Furthermore, financing partially mediated the influence of location, service quality, and developer quality on purchasing decisions. Meanwhile, the influence of building quality on purchasing decisions was fully mediated by financing.

Keywords: Location, Building Quality, Developer Quality, Service Quality, Financing, Purchase Decision

1. Introduction

Bank Tabungan Negara (BTN) Syariah is the sharia-compliant business unit of PT Bank Tabungan Negara (Persero) Tbk, specializing in financing based on Islamic sharia principles. BTN Syariah aims to expand public access to interest-free housing financing that adheres to sharia guidelines. One of its flagship products is the Sharia Home Ownership Loan (KPR), which utilizes Murabahah, Istishna, and Musyarakah Mutanaqisah contracts. This product is designed to offer a halal, secure, and transparent homeownership solution, catering specifically to the needs of the Muslim community, particularly in Aceh Province.

The high demand for housing, demonstrated by the persistent large housing backlog, underscores the urgency of providing accessible and sustainable housing finance. This situation is also evident in Aceh, where the demand for affordable housing continues to grow. In this context, BTN Syariah plays a strategic role as a financing institution that not only provides funds but also ensures compliance with Sharia principles. Therefore, service quality, trustworthiness, and financing effectiveness are essential to meeting public expectations.

BTN Syariah possesses unique characteristics compared to other Islamic banks, leveraging its core competency in housing finance. This institutional focus offers a competitive advantage but also requires consistent performance and high service quality, especially amid the intensifying competition in Islamic banking in Aceh following the implementation of the Islamic Financial Institutions Qanun. The presence of other Islamic banks, such as Bank Aceh Syariah and Bank Syariah Indonesia (BSI), motivates BTN Syariah to continuously enhance the quality of its products and services to remain the preferred choice of the public.

In terms of performance, BTN Syariah has demonstrated significant growth. By the end of 2023, BTN Syariah's total financing reached approximately IDR 37.1 trillion, with Sharia mortgage financing comprising nearly the entire portfolio. BTN Syariah also holds a significant national market share in Sharia housing financing, particularly in the subsidized mortgage segment. This achievement reflects growing public trust in Sharia-based housing financing and underscores BTN Syariah's strategic role in supporting the national homeownership program.

At the regional level, financing development at BTN Syariah KCS Banda Aceh exhibited a fluctuating yet overall increasing trend during the 2016–2025 period. The rise in financing after 2020 reflects growing public interest in Sharia-compliant mortgages. However, declines in certain years suggest that consumer decisions regarding mortgage financing are still influenced by various factors, including economic conditions, service quality, the financing process, and perceptions of Sharia compliance. This highlights the need for further research into the factors affecting Sharia mortgage purchasing decisions.

The decision to obtain a mortgage results from a complex deliberation process that includes identifying needs, gathering information, evaluating alternatives, and selecting a financing institution. A preliminary survey of BTN Syariah KCS Banda Aceh mortgage customers indicated that their purchasing decisions fell into the "fair" category. However, some respondents expressed disagreement concerning trust, service experience, and ease of payment. This suggests that acceptance of Sharia mortgage products remains suboptimal.

In addition to purchasing decisions, financing is a crucial factor influencing customer choices. Pre-survey results indicate that perceptions of BTN Syariah mortgage financing are generally favorable; however, concerns remain regarding the application of Sharia principles and the understanding of financing risks. This suggests that transparency and education about financing contracts and associated risks need to be enhanced to strengthen customer trust.

Location, building quality, and developer reputation all play significant roles in home purchase decisions. A less-than-ideal location can deter buyers, even if security and basic utilities are satisfactory. Conversely, the quality of the building and the developer's reputation influence buyers' confidence in the long-term value and security of their investment. Pre-survey results indicate that, although building and developer quality are generally considered satisfactory, perceptions of building design and developer reputation remain somewhat suboptimal.

Service quality is another crucial factor influencing purchasing decisions. Responsive, clear, and professional service enhances customer satisfaction and trust. Pre-survey results indicate that the service quality of BTN Syariah KCS Banda Aceh falls within the good category, although the modernity of its facilities and service technology still requires improvement.

Previous research has demonstrated that service quality significantly influences mortgage purchase decisions [13]. Additionally, [19] found that customer preferences for Sharia-compliant mortgages are shaped by perceived value and trust. However, this study did not specifically examine the roles of location, building quality, and developer reputation. Moreover, most prior research has focused on conventional mortgages or national contexts, thereby failing to fully representing the characteristics of Sharia-compliant mortgage customers in regions with Sharia-compliant financial systems, such as Banda Aceh.

Based on the identified research gap, this study is important to conduct by integrating the variables of location, building quality, developer quality, and service quality in relation to home ownership, with BTN Syariah mortgage financing serving as a mediating variable. Therefore, this study is expected to contribute theoretically to the development of consumer behavior research in Islamic banking and offer practical recommendations for BTN Syariah KCS Banda Aceh to enhance the quality of its services and Islamic mortgage financing.

2. Theoretical Study

2.1. Purchasing Decision

Purchasing decisions refer to the process consumers undergo when selecting and deciding to buy a product or service. This process involves several stages, including need recognition, information search, alternative evaluation, purchase action, and post-purchase evaluation. It is influenced by internal factors such as motivation, perception, and experience, as well as external factors like market conditions and product characteristics [10]. Purchasing decisions do not end with the transaction; they also encompass post-purchase experiences that can affect future consumer satisfaction and loyalty ([2]; Khoiriah et al., 2023).

When purchasing a home through Sharia-compliant mortgage financing, several key factors influence buying decisions. Financing that adheres to Sharia principles, while being flexible and transparent, is crucial as it directly impacts consumers' financial capability and sense of security (Yusra Shabira et al., 2025). Additionally, the strategic location of the housing complex, its proximity to public facilities, and its potential investment value significantly affect consumer interest ([1]; [20]). Other important considerations include the building's structural integrity and aesthetic appeal, the reputation of the developer, and the quality of service provided by both the bank and the developer, all of which shape consumers' perceptions of value and trust [1].

Purchasing decisions can be evaluated using several indicators that reflect consumer behavior throughout the buying process. These indicators include product and brand selection, purchase location or channel, timing of purchase, purchase amount, and payment method [2]. They demonstrate how consumers consider various factors before making a final decision. Consequently, these indicators can be used to assess consumer confidence and preferences when selecting products or services, including purchasing a home through Islamic mortgage financing.

2.2. Financing

Financing refers to the provision of funds or credit by financial institutions to parties in need, for both consumptive and productive purposes, under a mutually agreed repayment arrangement [3]; [4]. In Islamic banking, financing is conducted according to Sharia principles such as mudharabah, musyarakah, murabahah, istishna, and ijarah, which emphasize justice, partnership, and the prohibition of usury ([4]; Law of the Republic of Indonesia No. 21 of 2008). Therefore, financing is not merely a transfer of funds but also a financial instrument that governs the rights and obligations of both the bank and its customers, aiming to provide fair and sustainable financial benefits.

Customer decisions in choosing financing, particularly Islamic mortgages, are influenced by various factors. The location of the home is a crucial consideration because it affects accessibility, available amenities, and potential property appreciation [17]. High building quality in terms of structure, materials, and aesthetics, provides a sense of security and increases customer satisfaction, thereby encouraging financing decisions [5]. Furthermore, a developer's credible reputation and proven experience enhance consumer confidence. Additionally, the quality of service provided by both the bank and the developer including processing speed, transparency, and after-sales support, also shapes customer perceptions of the ease and security of financing [5].

Financing indicators encompass several key aspects that reflect the feasibility and reliability of a transaction. According to [8], these indicators include trust (confidence that funds will be repaid), agreement (consensus on rights and obligations), timeframe (repayment period), risk (potential business losses or unforeseen circumstances), and remuneration (rewards in accordance with Sharia principles through profit sharing). Together, these indicators form the foundation for financial institutions to evaluate the security, profitability, and sustainability of financing, while also influencing customers' decisions when selecting appropriate financing schemes.

2.3 Location

Location is a critical factor in marketing strategies and purchasing decisions, especially in the property sector. According to [6], location refers to where a company sells its products or services to ensure easy access for consumers, highlighting the importance of convenience and proximity to the target market. [7] further explains that location determines how easily consumers can access a product or service, considering proximity to public facilities, transportation, and activity centers. [8] underscores the impact of location on distribution costs, consumer convenience, and market attractiveness. Additionally, Law No. 26 of 2007 introduces a legal aspect, requiring locations to comply with regional spatial plans. Overall, location encompasses geographic position and accessibility, which influence selling value, consumer interest, and long-term investment potential.

According to [7], location indicators encompass several important aspects. First, accessibility, which reflects consumers' ease of reaching a location, including transportation options and distance from activity centers. Second, proximity to public facilities such as schools, hospitals, shopping centers, and workplaces, which adds value to a residence. Third, a safe, clean, and comfortable surrounding environment; and fourth, the availability of adequate infrastructure, such as roads, electricity, and clean water. The combination of these indicators determines a location's attractiveness to consumers and directly influences property purchasing decisions.

2.4. Building Quality

Building quality is a major factor influencing consumer interest in purchasing a home. According to [8], quality encompasses all product characteristics that affect the ability to meet consumer needs, including material durability, design aesthetics, and specification conformity. [9] emphasize that quality is the ability of a product to meet or exceed consumer expectations. Therefore, high-quality homes are constructed using strong materials, sturdy structures, and precise workmanship, providing a sense of security, comfort, and long-term investment value. [11] adds that building quality includes durability, reliability, accuracy, and ease of maintenance, while SNI 1726:2019 highlights that quality must also satisfy technical requirements such as structural strength, safety, comfort, and environmental health.

According to [5], building quality indicators encompass several key aspects. First, structural strength, which refers to the use of sturdy building materials that meet established standards. Second, material quality, including components such as cement, iron, and roofing materials. Third, an attractive design and aesthetics that align with consumer expectations. Fourth, supporting facilities, such as electricity, clean water, and adequate drainage systems. Fifth, compliance with the specifications promised by the developer. The combination of these indicators ensures that the home is not only safe and comfortable but also meets both technical and aesthetic standards, thereby increasing its investment value and occupant satisfaction.

2.5. Developer Quality

Developer quality is a crucial factor influencing consumer trust and decisions when purchasing property. According to [9]), company quality refers to an entity's ability to consistently deliver value that meets customer expectations. Quality developers are therefore able to fulfill promises regarding building specifications, handover times, and after-sales services. [11] emphasized that developer quality is measured not only by the product but also by service, reputation, credibility, and transparency in project management. [18] added that commitment to quality, compliance with regulations, and the ability to maintain consumer trust are important indicators. Furthermore, the Minister of Public Works and Housing Regulation Number 05/PRT/M/2014 mandates that developers must meet quality standards, provide facilities according to plans, and ensure sustainable area maintenance. Thus, developer quality encompasses the ability to build properties according to specifications, on time, legally, transparently, and professionally.

According to Dewi et al. (2022), developer quality indicators encompass five key aspects. First, the developer's reputation, which reflects the level of public trust based on experience and credibility. Second, experience in previous projects, which assesses the ability to complete projects on schedule and according to specifications. Third, legality and permits, including the completeness of documents such as land certificates and building permits (IMB). Fourth, commitment to project completion, demonstrating the developer's ability to deliver homes on time as agreed. Fifth, the availability of supporting facilities, which includes the provision of public and social amenities in the residential area as planned. This combination of indicators ensures that developers can build properties that are safe, comfortable, and reliable, meeting consumer expectations.

2.6. Quality of Service

Service quality is a critical factor that determines customer satisfaction and shapes the reputation of an organization or service provider. According to [7], service consists of a series of routine and continuous activities aimed at fulfilling the needs of both the service provider and the recipient. Anggraini et al. (2021) further explain that service involves activities that assist, prepare, or manage goods and services, with a primary focus on customer satisfaction, even though the outcomes are not always tangible. [18] highlights that service quality is oriented toward fulfilling customer needs and desires, encompassing products, people, processes, and the environment, while continuously adapting to evolving expectations. Therefore, service quality can be defined as the ability of a service provider to consistently deliver services that meet customer expectations and needs.

According to [3], service quality indicators are divided into five main dimensions. First, Tangibles, which include the physical appearance of facilities, technology, and professional staff. Second, Reliability, referring to the company's ability to provide consistent and dependable service. Third, Responsiveness, which reflects the company's readiness to meet customer needs promptly and accurately. Fourth, Assurance, defined as employees' ability to build trust through friendliness, courtesy, and effective communication. Fifth, Empathy, which involves employees' attention to and concern for customers' needs and interests. These five dimensions help organizations assess and significantly improve the quality of service perceived by customers.

3. Research Methods

In this study, the population consists of all BTN Syariah KCS Banda Aceh mortgage customers, specifically those who have applied for and received mortgage financing through BTN Syariah at the Banda Aceh Syariah Branch Office. The sample size was determined based on Structural Equation Modeling (SEM) guidelines, which recommend a minimum sample size of 5 to 10 times the number of indicators [10]. This study used 40 indicators, so the minimum sample size is 5 × 40 = 200. To conduct the research, the researcher utilized previously collected data and applied data analysis tools. This study employed Structural Equation Modeling (SEM) using AMOS software for data analysis.

4. Research Results and Discussion

4.1. Hypothesis Testing

The testing of the research hypothesis is as in Table 1 below.

Source: Processed Primary Data, (2025)

4.1.1.Direct Hypothesis Testing

The analysis reveals that housing location has a positive and significant impact on mortgage financing (p = 0.031; estimate 0.226) and also affects purchasing decisions (significance 0.044; estimate 0.171). This suggests that customers' perceptions of a strategic location strongly influence their interest in financing and purchasing a home. Building quality has been shown to significantly influence financing (significance 0.011; estimate 0.229), but it does not have a significant effect on purchasing decisions (significance 0.236; estimate 0.100), indicating that the physical quality of a house impacts buyers' confidence in securing financing more than it affects their purchasing choices. Meanwhile, developer quality has the most significant influence on financing (significance 0.000; estimate 0.411) and is also significant in purchasing decisions (significance 0.015; estimate 0.263), confirming the importance of developer reputation and credibility. Similarly, service quality is shown to be significant for both financing (significance 0.019) and purchasing decisions (significance 0.019; estimate 0.219), indicating that good service increases customer interest. Finally, financing directly influences purchasing decisions (significance 0.018; estimate 0.185), suggesting that an appropriate financing scheme enhances customers' likelihood of purchasing a mortgage.

4.1.2.Testing the Mediation Hypothesis

The results of the mediation test indicate that financing acts as a mediator variable between the independent variables (location, building quality, developer quality, and service quality) and the purchase decision for BTN Syariah mortgages. Location has a positive influence on the purchase decision through financing with partial mediation (Sobel test = 2.069; p = 0.038), meaning that financing partially explains the relationship between location and purchase decisions.

Building quality shows full mediation by financing (Sobel test = 2.295; p = 0.021), because the direct effect of building quality on purchasing decisions is not significant, so financing becomes the main pathway of influence. Meanwhile, developer quality and service quality have partial mediation with Sobel values ​​of 2.608 (p = 0.009) and 2.608 (p = 0.019), respectively, which means that these two variables still have a direct influence on purchasing decisions, but financing also helps explain some of their influence indirectly. Overall, financing strengthens the relationship between independent variables and purchasing decisions, both as a full and partial mediator.

4.2. Discussion

The study's results indicate that location significantly influences financing and mortgage purchase decisions at BTN Syariah KCS Banda Aceh. A strategic location with easy access and proximity to public facilities such as schools, hospitals, shopping centers, and public transportation increases the property's appeal. Additionally, a safe, clean, and comfortable environment is an important consideration for prospective buyers. This positive perception of location indirectly affects customers' views on the financing options available, increasing their confidence in obtaining a mortgage. Therefore, financing plays a crucial role in strengthening the relationship between location and purchase decisions, as a favorable location enhances customers' perceptions of the investment's value.

Building quality is a crucial factor in financing decisions. A home constructed with high-quality materials, robust workmanship, functional design, and comprehensive amenities can enhance customer trust in both the developer and the bank. Superior building quality reduces concerns about future maintenance costs and provides a sense of security against potential damage. However, building quality alone is insufficient to drive purchase decisions. The final choice is heavily influenced by the customer's perception of the financing scheme, with transparency, competitiveness, and affordability being key factors. This underscores the importance of integrating the physical quality of the property with the financing options to effectively influence purchase decisions.

Beyond physical quality, developer quality also plays a strategic role in influencing financing and purchasing decisions. Developers with strong reputations, extensive project experience, and a commitment to timely project completion enhance customer trust. Compliance with regulations, transparency of project information, and adequate after-sales service further reassure potential buyers, making them feel secure in their decisions. Clear and feasible financing options strengthen this trust, indicating that the influence of developer quality on purchasing decisions is partially mediated through financing. This confirms that developer credibility does not act in isolation when influencing consumer decisions but works synergistically with perceptions of financing.

The quality of banking service is a crucial factor in building trust and influencing purchasing decisions. Professional, responsive, friendly, and informative service enhances customer satisfaction and reinforces their perception of the financing scheme. When customers feel well-treated and receive clear information, they view financing as safer, fairer, and compliant with Sharia principles. Therefore, service quality not only directly affects purchasing decisions but also strengthens the impact of financing, leading to more confident and informed choices.

Financing has proven to be a crucial factor, connecting the quality of the property, the developer, and the service to the purchase decision. Excellence in the property or developer alone is insufficient to drive a customer's choice. The perception of clear, competitive, and affordable financing is a key determinant of customer confidence. An appropriate financing scheme makes the property's value feel commensurate with its cost, thereby increasing the likelihood of a purchase. The integration of property quality, developer credibility, satisfactory service, and sound financing creates a powerful synergy that influences consumer behavior.

These findings underscore the importance of an integrated marketing strategy between banks and developers. Banks should emphasize the property's superior location and quality in their promotions while offering financing schemes that are easy to understand, transparent, and aligned with customers' financial capabilities. Developers must maintain project quality, comply with regulations, and provide adequate after-sales service. This synergy not only enhances customer satisfaction and trust but also increases the likelihood of converting interest into purchase decisions. This holistic approach demonstrates that successful mortgage marketing requires a balance among the property's physical quality, the developer's reputation, the bank's services, and a supportive financing structure.

Furthermore, this study confirms that customers' psychological factors also play a significant role in decision-making. A safe, comfortable, and well-equipped residential environment not only enhances the perceived value of a property but also provides customers with a sense of security when deciding to obtain financing. This sense of security and comfort is further reinforced when supported by a transparent and accessible financing scheme. In other words, psychological and economic factors work hand in hand to influence purchasing decisions, so marketing strategies must address both dimensions.

Overall, this study demonstrates that the success of the BTN Syariah KCS Banda Aceh mortgage product is influenced by multiple factors. Location, building quality, developer reputation, and service quality all play significant roles, while financing acts as a crucial link that enhances the impact of these factors on purchasing decisions. Therefore, an effective marketing strategy must integrate all these elements to create a positive customer experience, build trust, and drive optimal purchasing decisions.

5. Conclusion

5.1 Conclusion

Based on the research findings, it can be concluded that overall, the purchasing decisions, financing, location, building quality, service quality, and developer quality at KPR Bank Tabungan Negara Syariah KCS Banda Aceh were rated as good. Location was shown to have a direct impact on financing, as did building quality, developer quality, and service quality, each of which significantly increased customer interest in financing.

Furthermore, location, developer quality, and service quality directly influence mortgage purchase decisions, whereas building quality does not have a significant direct impact. Financing plays a crucial role, as it not only directly affects purchase decisions but also serves as a mediating variable. Specifically, financing partially mediates the effects of location, developer quality, and service quality on purchase decisions, and fully mediates the effect of building quality on these decisions.

In other words, financing serves as a bridge connecting factors such as location, building quality, developer reputation, and service with the customer's final decision to obtain a mortgage. These findings confirm that the success of mortgage marketing at BTN Syariah KCS Banda Aceh depends not only on the physical quality or reputation of the developer but also on the clarity, transparency, and appeal of the financing scheme offered to customers.

Overall, integrating property quality, developer credibility, satisfactory service, and competitive financing schemes is essential for increasing customer trust and driving optimal purchasing decisions. These findings also demonstrate that mortgage marketing strategies must be holistic, considering the synergy among physical factors, reputation, service, and financing to deliver a comprehensive and compelling customer experience.

5.2 Suggestions

1.      Based on research findings indicating that financing acts as a mediating variable both partially and fully influencing mortgage purchase decisions at Bank Tabungan Negara Syariah KCS Banda Aceh, bank management should prioritize financing as a core strategy to enhance customer purchasing decisions. It is recommended that the bank develop financing schemes that are more competitive, flexible, and compliant with Sharia principles, particularly regarding margins, loan tenors, ease of requirements, and contract transparency. Furthermore, since financing fully mediates the relationship between building quality and purchasing decisions, BTN Syariah should strengthen collaboration with developers to ensure that high building quality is complemented by attractive financing options. For variables partially mediated by location, developer quality, and service quality, the bank is advised to integrate the benefits of these factors with effective financing communication to enhance customers’ perception of financing value and further encourage mortgage purchase decisions.

2.      The location variable had the lowest average value of 3.85. This is a concern for BTN Syariah, which is collaborating with developers to enhance the area's security by installing CCTV cameras at strategic points, providing 24-hour security posts, and working with local village and neighborhood associations, as well as the police, to conduct regular patrols. These measures will significantly improve residents' perceptions of safety within the housing complex.

3.      The building quality variable had the lowest average score of 3.96. Therefore, BTN Syariah needs to encourage developers to strengthen their quality control processes before unit handover, ensuring that every building specification meets the promised standards. Implementing stricter oversight and a verification mechanism involving customers prior to handover is expected to increase satisfaction with building quality.

4.      The developer quality variable had the lowest average score of 3.62. Therefore, developers need to ensure that the provision of public facilities meets the initial development promises and plans. BTN Syariah can also conduct regular monitoring as part of its oversight of developer partners to ensure that public facilities are delivered on time and meet consumer expectations.

5.      The service quality variable had the lowest average score of 3.68. This indicates a need to enhance the competency of BTN Syariah employees in building customer trust, particularly through training in interpersonal communication, empathy, and accurate information delivery. Improving the quality of service interactions is expected to strengthen customer trust in the institution.

6.      The financing variable had the lowest average value of 3.84. This indicates that BTN Syariah needs to enhance customer education regarding Sharia principles in financing distribution, including contracts, profit-sharing schemes, and risk mechanisms. More intensive outreach efforts are expected to strengthen customer trust in the Sharia compliance of the financing provided.

7.      The purchasing decision variable had the lowest average value of 3.98. Therefore, BTN Syariah should optimize its promotional strategy, especially during the program period, by disseminating more extensive and engaging information. Offering financing simulations, discounts on administration fees, or bundling programs with developers can enhance customer interest in applying for mortgages during the program.