Our Islamic home financing product , IjaraTM Home Financing, was established by a reputable and distinguished international board of sharia scholars in 1996. It works through a lease to own arrangement.
There are three different foundations including designing a contract that’s free from interest. The contract also includes the obligations and responsibilities in a conventional mortgage. For example, income tax deductibility is kept in place.
These halal loans start when someone chooses a property that they want to buy. The property is held by an independent trust. But choosing a property is the same starting point for both types.
Here are a few tips for picking the right property that meets your budget and needs.
- A survey will help you to avoid border disputes with your new neighbors. Understanding where your property lines are is essential. Accuracy matters here because your property tax will more than likely be based on how much you own. A trust is created for your Islamic home financing. These look after the property under the direction of the beneficiaries.
- Here’s another buyer’s secret. Some people think that buying the biggest house on the block is the right move but that’s not always the case. Keep in mind that the larger homes only appeal to smaller audiences when you go to resell. There’s an old real estate rule that says the biggest houses don’t always go up in value as much as the others on the same street. As far as your trust goes, remember you can transfer ownership simply and easily with halal loans.
- Buying the right house also means avoiding any hidden costs. If you are moving from renting into buying, there are going to be additional expenses. These can include home association dues, utilities, and property taxes. You’ll also need to get ready for maintenance and repairs.
A Devout Muslim and Islamic Home Financing
If you are a devout Muslim, homeownership must include sharia compliance against unequally shared risk and interest. Ijara-wa-Iqtina solves this issue by creating a trust. This process has been around in the United States for two decades.
However, there are some traditional considerations that you’ll need to look at when you’re saving for a house. Those include moving expenses like furnishings and upgrades. You might need to make some home repairs to make the place habitable.
Another Factor To Consider
Deciding how much money you can spend is another factor to consider. It’s important to set a price range based on your down payment, the amount of debt you owe and your income. Your credit score also plays an important role.
Islamic home financing also requires that a company has a credible fatwa. Keep in mind that scholars that are reputable have their certificates published. That doesn’t mean other ones aren’t qualified. They just might not be as well-known. We are always happy to provide you with any information you need to make the correct choices.
The sharia scholars that we use have years of experience in commercial and financial transactions.