What is an Islamic mortgage?

Islamic mortgage is a housing loan that suits Islamic law, allowing devoted Muslims to borrow money to buy home without endangering their religious values. There are several approaches to lending in the Islamic Banking Industry and financial companies can offer their products to non -Muslims. This option is available in countries around the world, especially for those with a large Muslim population and house prices too high, so that buyers can afford to pay cash directly. Islamic law does not prohibit involvement in banking and other financial activities, but must be carried out with the intention to benefit from both parties. Legal scholars argue that interest provides the advantage only to the creditor, not to the debtor and is therefore prohibited. Islamic mortgages eliminate interest and can be known as la'riba or "without interest" for this reason.

One approach to Islamic Mortgan is Murabahhah , in which the bank buys a house at a full price, determines the appropriate designationand sells it to the debtor for repayment. In this arrangement, both parties benefit because the debtor receives help with the house ownership and the bank from the transaction brings adequate profit. Both sides act as partners, while the title for the house goes immediately to the debtor.

Musharaka is another option. In this type of transaction, the debtor will enter the transaction with the help of an investor who supplies most of the purchase price. Both sides are owned by partners and one party pays the other. This arrangement is known as co -owned balance, where the final goal is for one partner to buy another. Investors are usually real estate companies, but families and businesses can also offer musharaka loans to other businesses and private parties.

Ijarah is another form of Islamic mortgage, where the bank and buyers created an agreement on rent for their own. The bank retains the title on real estate and owedík pays monthly rent until the balance and own house are paid for free and clear.

Islamic mortgage products in some companies are reviewed by Islamic scientists and authorities to make sure they correspond to the law. The Company may provide more information to help debtors with the decision -making process. In other environments, such companies can offer loans without guarantees that they follow the law, and debtors will have to evaluate the conditions of allegedly Islamic mortgages to see if it is suitable for their needs.