Islamic Mortgage financing
based on Diminishing Musharakah:
Contracts involved in
Diminishing Musharakah:
Following are the three
contracts which are inevitable in DM:
1. MOU for Shirkat-ul-milk:
The joint purchase of ownership
of the asset/property/equipment by the Bank and the client by virtue of
shirkat-ul-milk.
2. Lease (Ijarah) contract:
Since the usufruct of the asset/property
is left out to be utilized by the client, the client has to pay the rent for
using the part of property belonging to the ownership of the Bank.
3. Purchasing of Bank’s share by
the customer:
The client periodically
purchases the shares of the Bank already divided in unit shares in accordance
with his undertaking to purchase. The effect of purchase is the decline in
rental payments by the customer in result of periodic decrease in the ownership
of the Bank.
Proposed Parameters of Diminishing Musharakah:
APPLICANT
Single
and or Joint / Co-borrower is acceptable for determining the income criteria as
well as for the Qabala ownership.
FINANCING
AMOUNT
Minimum AFN 500,000 - Maximum AFN 4,000,000
DOWN PAYMENT
Minimum 50% of the total price
FACILITY TYPE
Financing facility based on Diminishing Musharakah
PURPOSE OF FINANCING/FINANCING
Purchase of Ready House / Flats
DURATION OF FINANCING/FINANCING
Up to 5 years
PROFIT RATE:
8.5% P.A
PROCESSING FEE: - 1% Flat (one time)
RENTAL CALCULATON
Diminishing Musharakah:
Monthly rental payments (installment reduces each
month proportionate to reduction of the ownership unit shares on monthly basis)
similar to simple interest calculation.
TYPE OF PROPERTY
Well-constructed house acceptable to the bank and
the age of property should not be more than 40 years
CURRENCY OF FINANCING
Currency of financings
in AFN