ISLAMIC MORTGAGE 2024

HALAL MORTGAGE ISLAMIC HOME PURCHASE PLAN WITHOUT RIBA MURABAHA MORTGAGE DIMINISHING IJARA SHARIA COMPLIANT MORTGAGE CALCULATOR SIMULATOR

An Islamic mortgage in 2024, is by definition a financing of home without Riba (interests) provided by an Isamic financial institution such loans also known as a "Halal home purchase plan," "Islamic home financing," or "Shariah-compliant mortgage".

The Islamic mortgage,unlike conventional mortgages, which involve the payment of interest (considered Riba and prohibited in Islam), is structured in a way that is compliant with Islamic ethical and legal guidelines and these mortgages enable individuals to purchase homes while adhering to Islamic financial principles.

Islamic mortgages provide a Shariah-compliant alternative to conventional mortgages for individuals including the specific terms and structures of halal mortgages may vary among financial institutions and jurisdictions, they all share the common feature of avoiding interest payments and adhering to ethical and equitable principles.

The Islamic mortgage in 2024 offers a Shariah-compliant financing option for Muslims who prioritize adherence to Islamic principles in their financial transactions, however, they come with unique structures and considerations that may be advantageous for some but less suitable for others.

ISLAMIC MORTGAGE CALCULATOR FOR EACH OF THE THREE COMMON ISLAMIC MORTGAGE OPTIONS: MURABAHA, IJARA, AND MUSHARAKA.

Islamic mortgage calculator that allows you to input the loan amount, annual interest rate, loan term, and choose from three mortgage types: Murabaha, Ijara, and Musharaka. When you click the "Calculate" button, it estimates the monthly payment based on the selected mortgage type and displays the result

THE THREE MAIN TYPES OF ISLAMIC MORTGAGES IN 2024

The three main types of halal mortgage are Ijara mortgage, Murabaha mortgage and diminishing musharaka mortgage .

The main difference between Murabaha and Ijara is that with an Ijara mortgage (leasing mortgage), the property will not immediately be registered under the buyer’s name, but he will be renting the property from the bank until full repayment is completed.

The third one consists of a diminishing Musharaka mortgage with the bank becoming a partner with the home buyer so that lender and borrower ‘co-own’ the house and the borrower gradually within an agreed period buys the bank's share of ownership.

1. MURABAHA MORTGAGE

Murabaha called also halal deferred sale finance is recommended by Islamic Finance to finance a home by avoiding the classic home loan structure which generates the Riba (usurious interest).

Murabaha for home financing is actually simple and asks the Islamic bank first to acquire the property itself, after owning it, it can then resell it to the borrower at a price added with a margin fixed in advance.

Withing islamic mortgage, the applied margin by the Islamic lender essentially corresponds to the cost of financing the deferred payment granted to a home buyer.

The main advantage of Murabaha mortgages (versus Ijara mortgage) is that from the first day, the property is registered in the borrower’s name with the repayment period and monthly repayment amounts agreed between both parties.

Halal mortgage via Murabaha fixes the terms of repayments of the mortgage with the possibility to repay the loan in full at any point without paying any penalty.

Murabaha mortgage flip side is that the buyer is required to provide with a percentage of the property upfront up to 20 per cent which makes this halal financing option adapted to people who are able to inject some capital.

2. IJARA MORTGAGE

Ijara mortgage called also lease to own is the Islamic home financing option where the property belongs to the bank after it has purchased it and the borrower will make monthly rental payments to the lender.

Ijara mortgages have proven to offer an important advantage in comparison to Murabaha, as it doesn’t require any initial payment or deposit from the future home owner.

At the end of the agreed term of an Ijara mortgage r once the price of the home has been repaid in full, ownership of the property is transferred from the bank to the initial borrower.

3. DIMINISHING MUSHARAKA MORTGAGE

Under a diminishing musharaka contract, the customer and the Islamic bank purchase the property jointly under a musharaka contract, loosely a partnership contract as understood by Shariah law. The customer will have exclusive occupation, and will pay the Islamic bank rent on that part of the property which is owned by the Islamic bank. The transaction is called diminishing musharaka because the partnership shrinks as the customer buys out the bank and ends once the buyout process is completed.

MORTGAGE TAKAFUL

A mortgage Takaful or Islamic mortgage insurance is dedicated to cover the borrower repayment risks under Islamic law with his family acting as beneficiary of the insurance.

A large number of Islamic insurers are offering a Mortgage Takaful Plan to protect the borrower’s family by repayment of the debt through certificate proceeds in the event of his death or Total Permanent Disability (TPD).

The first private lender group consists of friends and relatives (family). Many borrowers address their financing needs to friends and family to fund a car or obtain an advance payment for a mortgage. This is an easy option as being well known as a borrower and trust being the basis of lending. However in case of difficulties to reimburse the loan, the damages on the relationship can become irreparable.

ISLAMIC MORTGAGE ONLINE

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