Musharakah Mutanaqisah Home Financing Issues In Practice

Issues with the product s applications in islamic home financing.

Musharakah mutanaqisah home financing issues in practice. Musharakah mutanaqisah based house financing legal issues and recommendations introduction in our world nowadays the contract of al bay bithaman ajil bba had always been used for long time duration of financing. Home financing pricing issues in the bay bithaman ajil bba and musharakah mutanaqisah mmp global journal al thaqafah. Ownership issues under bba or murabaha. Introduction inthe early inception ofislamic banking and finance ibf in malaysia in 1983 the availability ofislamic mortgage isonly dominated by asingle instrument orproduct known asbay bithaman ajil bba home financing.

An overview of musharakah mutanaqisah contract the concept of musharakah mutanaqisah mm mode of financing where. Pdf on jan 1 2016 alam asadov and others published musharakah mutanaqisah home financing. As relatively anew home financing product. For example home financing.

For quite some years now scholars and regulators have been telling practitioners about musharaka mutanaqisa diminishing equity partnership and its answer to the many questions regarding other term financing structures available in the market. Islamic home financing musharakah mutanaqisah legal framework. Smolo e hassan m. This paper aims to examine the practical issues in the musharakah mutanaqisah mm financing and subsequently recommends possible solutions to mitigate these issues and improve the current practice this paper analyses the theory and current practices of mm offered by islamic banks it is suggested that islamic financial institutions consider revaluation of property s value to its fair.

The next two sections dis cuss the proposed revised mm contract that addresses the issues in executing this contracts in practice and concludes with a summary. Issues and recommendations in musharakah mutanaqisah house financing 1. Lastly this paper raises and analyses possible legal issues that may arise in enforcing a musharakah mutanaqisah home financing contract where a legal charge is created and where a trust is created. The potentials of musharakah mutanaqisah for islamic housing finance.

Musharakah mutanaqisah is an alternative contract that can be offered under home financing and can replace bai bithaman ajil bba as bba is similar to fixed rate debt financing or murabahah. This paper also elucidates the issues facing musharakah mutanaqisah home financing for properties under construction and proposes an alternative model for solving the highlighted issues.