Halal Housing Loan

Halal housing loan that I used to buy my apartment 4 years ago. As a Muslim, I'm cannot use any financial service that have something to do with interest or riba' . Thus, I have to find any halal financial products that I can use to buy my dream apartment.

In Malaysia there a lot of banking institution that offer halal financial services. So what the halal housing loan means. Actually I not really understand the terms but as being explained by the banking officer, I come to understand this products.

The halal housing loan concept is simple. The bank will buy the house from the house developer and then after do some calculation the bank will sell back the house to me at certain prices. I in the other hand,will pay the bank at certain fix amount for the next 20 years. This is how they apply the halal concept.

Let be explain my experienced. I have found my dream apartment that being build by housing developer. The developer will sell the apartment at MYR75,000.00. After pay some deposit, I will bring the relevant paper to the bank. The bank review and I told the bank officer that I want to purchase this apartment will halal housing loan and will to pay monthly to the bank for the next 20 years.

The bank officer than value the apartment and calculating and do estimation the apartment value at the end of the 20 years. So the bank value my apartment and they said that after 20 years the apartment value is MYR120,000.00. By the bank will buy the house from the developer at MYR75,000.00 and the sell back to me at MYR120,000.00. Which mean that I need to pay the bank at the fix amount MYR5oo.o every months for the next 240 months.

In this case the bank made a profit about MYR120,000. - MYR75,000.00 = 45000.00. The payment that I have to make is just MYR500.00 and it's fix. At the beginning, I thought I'm losing a lot of money here, but because the advantage is that I can properly plan my budget, because every months I just have to aside MYR500.00 to pay for the halal housing loan.

It is not like the conventional, that the amount that one's have to pay may be fluctuated, depends on the interest rates. If the interest rate goes down you have to pay less. But when the interest rates goes up, you have to pay more !. For me if this thing happened to me, where I have to find the extra money, while my income is fix !. This make me worries less what ever going to happen in the interest rate.

But one good news for me is that, my neighbors have sold his apartment last months at MYR115,000.00 !. So it means that my apartment value is now is about at MYR100,000.00 and I don't need to wait for 20 years !. Therefore if next 20 years my apartment maybe value at MYR200,000.00. If that so everybody WINS , the bank and me !. Insya Allah. That what I have experienced using halal housing loans. In Malaysia, as I know, one's not necessary to be a Muslim to use halal financial services.