Factors about Islamic Home Loans
Home buying is definitely a complicated process. At first, you have to estimate the mortgage you will be getting with your present credentials, then you will have to tally whether the houses available in your budget would be able to meet your lifestyle needs or not (or for that matter, whether, at all they would be able to accommodate all your family members comfortably or not). If you are a Muslim, you would have to go a step further in finding out about the way in which Islamic home loans work. It is very important to realize that the Holy Quran does not allow Muslims to receive or pay interest and add on to his wealth in the process. You can multiply your wealth with the help of trading, but not by receiving interest rates. This particular aspect makes Islamic home loans an interesting area of study since it is very difficult to imagine mortgage without interests. Read on:
Two types of Islamic Mortgage Loans
There are two types of loans featuring in Islamic home financing– the Ijara loans and the Murabaha loans. Make sure that you are learning properly about these two loans in order to ensure that you’re not flouting the norms when it comes to availing mortgage.
As per the Ijara method of Islamic home financing the bank buys a property and gives it to you on lease for a period of good 20 to 25 years. In this case, you can even buy the house at the end of the lease period. And, in between all these years you will actually be paying rent instead of interests. The rent varies as per the rates of interest in the market. That’s one way of owning a property if you’re a Muslim. There’s another way explained below.
According to this particular method of Islamic home financing the bank buys the property and sells it to you at a fixed profit. The property is registered against your name. It is very important to find out about these particular methods of home financing in order to ensure that you are actually not flouting the norms of the holy Quran while buying your dream home.
Make sure you’re finding out the banks, which have policies in compliance with the Islamic method of home financing. Hopefully this article has been of help.