Here is an introduction to investing in real estate using Halal home financing

Many clients ask us why they should invest in halal home financing to finance the purchase of real estate. There are several good reasons to use halal home financing to buy a home or business. Of course, staying sharia compliant is a key consideration.

These financial vehicles steer you away from riba and other types of usury. That’s why they can all be listed under the halal funds banner.

Ijarah and Halal Home Financing

This is the Islamic lease agreement you are familiar with if you’ve been reading our website. It gets around the problem of lending money to earn interest in the following way.

Ijarah investors make profits. They charge rent on the leased property.

There are other types of halal funds you can invest in. Not all of them pertain to real estate. However, after owning your property for several years, you might want to take a look at some of these options.

Musharakah

This partnership allows everyone involved to stay sharia compliant. An agreement works the details out. beforehand. Each partner shares in the losses in a ratio that’s in proportion to their investment.

Practicing Muslims consider this good halal investing. It works well for term financing projects as well as putting money together to finance business setups. This is a popular method for people looking to use halal home financing.

It is also the preferred approach for many large enterprise financing projects.

Mudarabah

It is a partnership. However, there is one subtle difference here. The investor provides money and capital to an investment manager. Losses are born by the investor.

This sharia compliant contract is fairly simple. One of the parties provides all of the capital for each project. The other uses their entrepreneurial skill set to manage the business.

Murabaha

This is the most straightforward of the Islamic finance vehicles we have highlighted here. It involves purchasing and reselling one asset. It is still a method used for halal home financing. That’s because there is no money lent here for profit.

Halal Home Financing and Assets

An investor buys a particular asset and then resells it for a higher price. The person who buys the asset is able to pay back the higher price with a series of installments. This allows them to avoid paying interest.

The interest in different kinds of Islamic financing is growing. Halal home financing was originally designed to appeal to the Muslim community. However, now people of all faiths are interested in the social and economic components. Why not get in touch with us today? We can walk you through our process and answer any of your questions. Helping you realize your dream of owning real estate while staying sharia compliant is our number one priority.