Simply, American Banks had been over financing home purchasers. Assume a potential home purchaser moved toward his Banker for a home advance, and his FICO score and money related standing would qualifies him for a home credit of, say, USD 100,000.00, his Banker would joyfully propel him say USD150,000.00! Normally this borrower would not be in a position to reimburse the stipulated portions on account of his lower reimbursement limit.
This would in the end prompt to a default on part of the borrower, rendering his credit account a non performing resource.In the light of the Banking emergency in the United States furthermore in Europe, it would be beneficial furthermore fascinating to observe the home credit financing situation under the Islamic arrangement of Banking.
Regularly, under the Islamic Banking framework, home advance financing depends on the rule of Profit Mark Up on the cost of the property, by common assent of the Bank and the Borrower. This kind of financing is typically done under the agreement of Murabaha.
It goes this way. Assume you are keen on purchasing your fantasy home (who’s most certainly not!). You approach the Islamic Bank with your prerequisites concerning the financing.