The term “Islamic mortgage” refers to a loan that complies with Sharia law. These mortgages are different from regular home loans in that they do not need interest payments, which is prohibited by Sharia law. A payment of at least 20% of the property price is usually required for a Sharia mortgage.
Religious Muslims frequently require a unique sort of loan to purchase a home, one that is entirely consistent with Sharia law.
What is an Islamic mortgage and how do they work?
Earning money from money is prohibited, according to one of the Islamic faith’s basic concepts. Wealth generation is only acceptable if it is founded on balanced trade, with risks and gains shared. As a result, any kind of finance that requires paying interest on money borrowed – such as a standard mortgage – is outside the scope of sharia law.
As a result, an Islamic mortgage isn’t really a mortgage. A bank will purchase a property on behalf of a purchaser rather than giving loans and charging interest on it (becoming the legal owner). For a set period of time, the purchaser agrees to make regular capital and rental loan payments. The buyer receives legal ownership of the property at the conclusion of the period.
We can connect you with a qualified professional with experience in all aspects of Islamic finance who can guide you through this procedure via our special advisor service.
Simple 4 Steps
The homebuyer & Guidance Residential agree to be co-owners in the property.
The two parties buy the home and the ownership of the property is determined by each party's investment.
The homebuyer makes monthly payments to Guidance Residential.
Over the course of the arrangement, the homebuyer purchases all of Guidance Residential's ownership stake and becomes the sole owner of the property.
For best performance of your business, you need to choose a suitable business model. AIG Corporate Services Provider offers following services for business owners:
- Mainland, Free Zones or Offshore company registration services in all Emirates of UAE
- Opening bank account with all local leading banks
Speak to our experts for assistance for registration of your company. We provide economical cost service, complete guidance and assist in completing all formalities.
Start your Business Today