Musharakah Mutanaqisah Home Financing In Malaysia

For more information on the difference between islamic and conventional financing see types of home loans in malaysia.

Musharakah mutanaqisah home financing in malaysia. This study aims to identify the challenges surrounding the implementation of musharakah mutanaqisah islamic home financing in malaysia. Despite it is more shariah compliant than other products such as bay bithaman ajil home financing musharakah mutanaqisah home financing is still not in favor of the islamic banks in malaysia when they structure their mortgages. But to implement it. Shariah advisory council bank negara malaysia there was a proposal from an islamic financial institution to offer islamic house financing product based on the concept of musyarakah mutanaqisah.

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. Musharakah mutanaqisah mm home financing for affordability of homeownership. It is not that it is impossible. One of the key reasons there are still a number of unresolved issues if these banks were to strictly follow the rules of musharakah mutanaqisah contract.

At least two banks kfh malaysia and citibank malaysia have discontinued their musharakah mutanaqisah based home financing products. A simulation case study approach since 1990s the increase in housing price housing loan application rejection and bankruptcy due to housing loan default have highlighted the need for a better way of home financing. Musharakah mutanaqisah home financing in malaysia. An evaluation on musharakah mutanaqisah based house financing by islamic banks in malaysia.

In general the modus operandi of the house financing product based on musyarakah mutanaqisah is as follows. Essentially islamic banks follow two types of islamic banking principles bai bithaman ajil bba and musharakah mutanaqisah mm. What are the advantages.