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:
Single and or Joint / Co-borrower is acceptable for determining the income criteria as well as for the Qabala ownership.
Minimum AFN 500,000 - Maximum AFN 4,000,000
Minimum 50% of the total price
Financing facility based on Diminishing Musharakah
PURPOSE OF FINANCING/FINANCING
Purchase of Ready House / Flats
DURATION OF FINANCING/FINANCING
Up to 5 years
PROCESSING FEE: - 1% Flat (one time)
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