Islamic home financing and Islamic mortgages are really popular now. But there are a lot of people who still think that there is not much difference in an Islamic mortgage and an ordinary mortgage. They say that Islamic home financing and mortgages offered by the banks and financial institutions are not 100% Shariah compliant. What is your say about it? Is it true?
Islamic mode of finances are sharia compliant only when they have passed the stringent tests laid down by the Islamic principles relating finance. These products are shariah compliant and are halal. Capitalism has been a roaring economic system until now. People are only reluctant because of the fact that the work done on Shariah Compliant products is much less than needed and the other financial instruments developed. Increased global demand for shariah compliant products has sped up the process of Shariah Compliant Finance Products and we will definitely see a lot of surge in that in coming years.
The Islamic way of financing is an alternative to the Interest based financing, which is prohibited in the Islamic Law of Shariah. In the Interest based financing system the value of money decrease and its flow in the society become stagnant. This causes the inflation to rise and the money remains in the hands of specific number of people. If also promotes unequal distribution of money in the society. As an orthodox system this financial system is functioning from more than three hundred years. It will take time to shift from the older pattern to the Islamic way of financing like
Ijara
Mudarabah
Musharaka
Diminishing Musharaka
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