Commentary

67 Islamic home mortgages

COMMONHOLD vol 8(1)
| Commentary

67 Islamic home mortgages

| Commentary

67 Islamic home mortgages

An Islamic home mortgage is an arrangement providing finance for the purchase of residential property which avoids the prohibition in Islamic law on paying or receiving interest. Under this arrangement a finance provider purchases a property and leases it to the intended owner. The lease is commonly for 25 years. The intended owner makes monthly payments comprising rent and a contribution towards the purchase price.

The term of the lease exceeds that permitted for leases of residential units, and accordingly this method of financing the purchase of property cannot presently be used in respect of residential

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