TYPES OF ISLAMIC FINANCING
The fundamental difference between Islamic banking and the more conventional version is the fact that, in Islamic banking, no interest is charged. Instead, both the provider and the investor join together in a partnership agreement in which profits and losses are shared. The investor has the added comfort of knowing that the provider will never invest funds into anything that is considered to be against Islamic ethics and morals.
When it comes to purchasing a property, Tamweel offers a number of basic options, all of them Sharia compliant and relevant in different ways to the prevailing conditions in the local property market. Your Tamweel finance advisor will be pleased to help you decide which one is right for you.
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A Selection of Islamic Banking Products
This is a contract in which the purchase price, the selling price and the profit margin are clearly stated and agreed upon by both provider and investor from the outset. With this 'fixed rate' contract, you pay a specific regular amount throughout the financing period.
This is a lease contract where the finance provider effectively buys the property outright then leases it to you, the customer, in return for rental payments over a fixed period. Assuming all the payments have been made, the provider promises to transfer ownership of the property to you at the end of the financing period.
Under this type of contract, costs and other liabilities arising from owning the property are the provider's responsibility, while costs and other liabilities arising from using the property are your responsibility.
Ijara is only available for properties that are ready for occupancy.
This is similar to Ijara, but it applies to properties that are still under construction. The provider undertakes to pay the developer directly, according to his payment schedule. Once the construction is completed, the contract works exactly like an Ijara product. Your repayments to the provider only start once the property is handed over to you.
This is a contract commonly used to finance the construction of buildings and industrial premises. With Istisna'a, both you and the provider fully agree to the contract price and the specification of the house or building, before construction begins.
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