“You know, Fatima, in the end it’s all the same. Islamic Finance companies just use different terminology.”
Have you been in Fatima’s position? Have you been considering Islamic Financing for your residential mortgage needs and have been told otherwise? Many of our customers are often faced with this dilemma and before they can move forward, the question whether islamic financing is truly halal lingers in their mind and causes confusion.
Riba Free with Shariah Board Approval
Devon Bank has been offering Islamic Financing designed to avoid conventional loans for nearly 20 years. To answer the question an Islamic Mortgage isn’t a loan, rather an installement sale which is free of interest. Our documents have been drafted in consultation with local religious authorities. We have received the Fatwa of the Shariah Supervisory Board of America (Mufti Nawal-ur-Rahman) and other renowned scholars have examined our financing products and found them acceptable.
So what is Devon Bank’s halal islamic financing product? We offer a Murabaha transaction involving a purchase and deferred payment resale. In this scenario, we buy the home for you and sell it to you with an agreed-upon profit rate. Often the “profit-rate” is misconstrued as just another word for interest. However, unlike a conventional loan the house is being sold to you at a fixed price which includes the bank’s profit which is determined by the purchase price, the amount of down payment, the term of repayment and the market rate of return on real estate transactions that our investors expect.
The Key Difference
The transaction is structured in Shariah compliant manner, we avoid lending you the money and therefore there is no interest involved. Rather than lending you the money to purchase the property of your choice with interest, Devon Bank purchases the property of your choice and sells it to you for a fixed price. At closing, you do not sign a promissory note that states the principal amount and the rate of interest at which the principal will be repaid. Instead, you will be signing a Murabaha contract for the balance amount due on the purchase price of the house.
Are you ready to take the next step with us? Do you have questions? Please don’t hesitate to reach out to one of our Islamic Financing Specialists. Our knowledgeable experts can guide you every step of the way and address all your concerns. Call 888-90-DEVON to get started.