Islamic Investment Topics: How Does An Islamic Construction Loan Work?
The Ijara Community Development Corporation (IjaraCDC) is happy to help with your commercial and residential Islamic investment plans. However, there are some differences that you need to know about. That’s why our Sharia compliant method covers commercial purchases too.
Our job is to make the process of applying for and accessing Islamic finance user friendly and professional. As such, we provide the options that help you to steer away from riba in your business dealings. The IjaraTM structure we use here is different than the one applied to residential ijara Canada loans.
Here’s what you need to know about an Islamic construction loan to get started.
The information you need to bring to the financial table is a little different for commercial properties. Projected and historical income are important so you’ll need to make sure to have an accountant put those together. If you’ve got a business plan, he should have that information as well as the expenses that need to be included.
A Solid Business Plan
Having a solid business plan is a good starting point. Remember, whether you’re looking at a commercial or residential Islamic investment, you’ll need to get lenders involved. They are going to want to see facts and figures.
There are some other details that make the two types of Islamic finance different. These include the repayment schedules that apply to Ijara Canada and other Islamic loans. For commercial loans, the terms can go from five years all the way up to 20 years.
There are some other metrics you’ll need to consider if you’re looking at getting in Islamic construction loan. For example, what’s called the loan to value ratio is lower for commercial propert/y. Like the name suggests, this is the number that you get by comparing the property’s value to that of the loan.
This type of Islamic investment requires some basic documentation.
For example, you’ll need to start with the basics that includes a driver’s license and Social Security card. Any lender will also want to see you have a solid work history. That’s why you’ll need to supply personal tax returns and/or a W-2 for at least the last two years.
Bank Statements for Islamic Investment Products
Bank statements are necessary. Try to find all of those for a two-year period. Make sure to include pay stubs for the last two months.
If you’re self-employed, you will need to get a letter from your accountant and two years’ worth of business tax returns.
Islamic construction law also requires construction plans and blueprints as well as estimated costs. If you are using a licensed contractor, it’s good to supply their information. Of course, any building permits will need to be included.
Ijara Community Development Corporation (IjaraCDC) can help you through the process. We offer a variety of services to help structure Islamic investment products. Don’t forget we also offer a free android/Apple app because we understand the importance of innovation.
