Interest free MortgageNon-interest mortgage
In fact, there are several Islam-friendly credit programmes that help Muslims buy houses with Sharia (or Muslim law) approved funding that does not calculate interest in the same way as a banking institution would. For each client (and for each property), a trustee is set up, composed of money from the investor, and the trustee immediately purchases the house.
In this case, the real estate is owned by the trustee and the clients find themselves in a rent-to-own position; each year the client possesses more of the building. AFFIFI says it has the same conditions as a normal mortgage, usually up to 30 years. "Once you buy the entire home, the trusts can become yours (for further purchases), Afifi says, and you can even take out or fund home equity facilities while you pay for the home.
If you decide to re-finance through a normal commercial deposit taker, there is interest, but not if you do so through Ijara CDC. "It will always be a little more costly to do it this way," Afifi says. As a consequence there is a lot of unnecessary red tape, a lot of cost for the business, and as a consequence prices are usually slightly higher.
"You' re probably gonna be paying 3.99% here. "Although from a technical point of view it's not interest, it's rental. The Guidance Residential, a Virginia-based credit lending firm in New York, is another firm that offers this type of thing. NPRs PlanetMoney focused specifically on the University of Michigan in Michigan, a track record of selling $850 million dollars in Islam-compliant mortgage loans (the firm works with Freddie Mac).
Credits are available in New Jersey, but not in New York. Bigger institutions such as HSBC, which have tried to provide similar buyer choices, have ceased. Perhaps these kinds of loan are less prevalent in New York City than in other parts of the state. Freddie Mac and Fannie Mae buy Sharia-compliant mortgage bonds from selected authors, but they limit all mortgage payments to single-family houses at $417,000, a fairly low rate for many New Yorkers.
Cooperatives are usually more tricky - none of the creditors work directly with cooperatives, they say - so, according to Afifi, their business has only worked with New York purchasers who buy condominiums and single-family houses. So we asked a fistful of mortgage brokers if they had ever seen them in New York and none of them had them.
Maze Farnesa, a Queens realtor, says he's trying to get Muslims to take out traditional credit, even with interest. "Farnesa says the costs of the interest-free itinerary are too high.