i. HOME FINANCING FACILITY

A Mr. Customer wants to buy a house from a developer (vendor). So, he had paid 10% deposit for the price of the house. However, he does not have enough money to make 90% balance of the payment. As such, he needs a house  financing facility from an Islamic Bank. 

Once Mr. Customer approaches the Islamic Bank, there are few shariah principles can be applied for this particular purpose which are:

1. Musharakah Mutanaqisah
2. Istisna'
3. Ijarah
4. Murabahah / Bai' Bithama Ajil (BBA)

Under Musharakah Mutanaqisah, The Islamic bank and Mr. Customer are sharing capital to purchase the house. At the first place, Mr. Customer identifies which house to be purchased. After paying e.g 10% of the purchase price which is considered as a deposit, then he seeks a financing from the Islamic Bank.

The Islamic Bank will enter into Musharakah financing contract with Mr. Customer by paying the developer/

vendor the 90% balance of the cost price of the house.

After that, the Islamic Bank and Mr. Customer enter into Ijarah contract, where Mr. Customer agreed to rent the house for at specific rental rate for a certain period/ tenor. As a result, the monthly rentals paid by Mr. Customer will be used to buy back capital portion owned by the Islamic Bank until full ownership transferred to Mr. Customer at the end of financing period, let say the tenure is 25years.

For Istisna' home financing, Mr. Customer places his order to instruct the Islamic Bank to build and complete the house at the price of RM507,078. 

 

Then, the Islamic Bank places the order to the contractor, instructing the latter to build the prescribed house. The order is in the form of Letter of Undertaking from the Islamic bank to pay  the Contractor amounted to RM225,000.

The contractor constructs the house and will deliver the completed house directly to customer. Upon received the completed house, Mr. Customer will pay by a series of installment to the Islamic Bank, let say for 25 years.

While for Murabahah/ BBA financing, Mr. Customer intends to purchase a house from developer/ vendor. As he does not have enough money to pay the RM 300,000 purchase price of the house, Mr. Customer approaches the Islamic Bank for financing. 

The Islamic Bank, will purchase the house from the developer / vendor at the stipulated price.   Subsequently the Islamic Bank will sell  the house  to Mr. Customer at selling price RM 888,318.90  which cost plus 10% profit. Mr. Customer will pay the stipulated amount by a series of installment let say for 25 years.

The Islamic bank may grant ibra' / rebate for the early settlement or upon the maturity of the financing tenure.

 

Abdul Hadi Jusoh

Daya Fikir, Kajang.