There are many key differences
between conventional mortgage finance and Islamic mortgage finance. Under
conventional mortgage, in order to purchase a property the customer borrows
money and repays it with an additional amount over a period of time. The
additional amount is the amount of interest which is against the Shariah
rulings of Islam. Under Islamic mortgage finance facility, Islamic bank shares
with the customer in purchasing his desired property. Accordingly, the customer
and the bank become the joint owners of the property in proportion to their
share in purchasing the property.
In order to own and use the entire property,
the customer purchases the share of bank’s property over a period of time and
also pays the rent for using the bank’s share of the property. Over a period of
time, the customer manages to purchase the entire share of bank in the
property. Ultimately, the customer becomes the sole owner. Further, in case of
Islamic mortgage finance, the rent will be charged after the lessee has taken
delivery of the property and it is in workable/usable condition. Rent cannot be
charged from the day the price was paid to acquire the property/asset. If the
supplier has delayed the delivery after receiving the full price, the lessee
should not be liable for the rent of the period of delay. In case of
conventional mortgage finance, normally the lease rentals starts from the date
the bank make payment for purchasing the property/asset.
No comments:
Post a Comment