Bai’ al ‘inah

Islamic Finance Sale and Buy Back Agreement

Bai’ al ‘inah, which is a sale and buy-back agreement, is a type of Islamic finance that is a banking activity that is congruent with Shariah, which are the principles of Islamic law. Under Shariah there cannot be any fixed or floated accepted payments of interest fees when money is loaned. There are both private and semi-private financial institutions in the Muslim community that deal with such things as a Bai’ al ‘inah or Muslim mortgage. A Muslim mortgage allows practicing Muslims to obtain a home loan.Bai’ al ‘inah is a part of Islamic finance, such as a Muslim mortgage, where there is transaction of buying and selling between the customer and the financial institution. The financial institution, or the financier, will purchase an asset from a customer and the price that they pay for the asset will be disbursed by the terms that the financial institution lays out. Because of this the asset that is purchased is one that the payments are deferred and the price paid will be done so in installments. The second sale in this type of Islamic finance is done so in order to make the customer obliged to the financial institution.Loan companies that are shariah compliant will deal with transactions such as a Muslim mortgage in terms of Islamic finance and a Bai’ al ‘inah to name just 2. When the seller sells an asset to the buyer in a Bai’ al ‘inah they will later buy back the asset, but the price will be lower than it was originally. Also, it may also be if a customer makes an offer to sell some of their assets to a financial institution, by installments, at a higher price that they sold it to a financial institution. The profit for the financial institution is the different between the price they bought the asset for and the sale price of it. This is an important Islamic Finance transaction to understand.A Bay-al Inah is very similar to tawarruq, but in tawwaruq there will be a third party that is involved in this type of Islamic finance as an intermediary. There are differing opinions between Middle Eastern scholars and South East Asian scholars, from a shariah perspective, on if a Bai’ al-Inah is an acceptable financial practice. However, they are available to practicing Muslims and if you are looking for a Bai’ al-Inah or Muslim mortgage they are available.There are reputable loan companies that are shariah compliant when seeking out a Muslim mortgage that can be of great help with these types of Islamic finance. Following the rules of shariah doesn’t have to be difficult when completing banking transactions. Learn the practices and follow them closely each and every time.