How Does an Islamic Mortgage Work?
Getting a piece of the American or Canadian dream means buying real estate. An Islamic mortgage is a path to getting the keys to your house or business. We can help here at Ijara Community Development Corporation (IjaraCDC). Our Ijara structure can help you put together a halal mortgage that’s riba free.
Here’s how these Islamic mortgage in the usa products work.
The first step is to understand how sharia compliance makes these mortgages a little different than the traditional Western model. The first building block is a trust. Understanding why one of these is used with a halal mortgage is key. We can explain everything you need to know. Read on and get in touch with us for a full understanding.
Many people have heard the word before and understand it carries a legal weight. Devout Muslims and other people looking for justice in financial matters are interested in trusts for a special reason. Implementing a trust into the formula is the first step to guarding against unequally shared risk and interest. Here’s how.
The Trust: Here’s What You Need to Know
The process of the heart of a halal mortgage is called Ijara-wa-Iqtina. It’s not a complicated idea at all. The phrase itself means lease and ownership. The trust owns the property so there is no question about steering clear of riba. In turn, the property is leased to the customer that bought it initially.
There is no need to worry about your rights as a homeowner under this arrangement. You’ll have all of the ones allowed in North America including being able to update and renovate.
When you want to sell or move, the trust sells the property to you under the terms of a legal document called the promise to purchase.
It’s a solid process that’s sharia compliant.
There are some excellent reasons why you can use an Islamic mortgage USA product to own your own home. Here are just a few:
- An IjaraTM transaction keeps you free from riba. At the same time, you can enjoy all of the tax breaks allowed in the United States. The property taxes and some of the costs involved in the purchase fall under this category. You can also deduct any interest on the mortgage.
- Equity. Paying rent is throwing your money away. You will never see any return on that investment. An Islamic mortgage lets you build up ownership. You’ll be able to put together a nest egg that you and your family can enjoy.
- You own the home. That means you can live in it, sell it, or renovate it as you see fit.
Islamic Mortgage Boxes to Check
There are a few boxes to check at first. Generally, you’ll need to have fairly good credit, a decent income and enough money to look after closing costs and the down payment.
Getting a halal mortgage with us is easier than you might think. The investors we work with all offer highly competitive fees and rates. What’s more, Ijara CDC offers a simple user friendly online application for an Islamic mortgage.
