Najaah Sharia Mortgages
IMPORTANCE OF SHARIA-COMPLIANT MORTGAGES
According to Standard & Poor’s, Islamic financing has grown steadily at a rate of 10% in the last decade, a global meltdown and numerous economic swings notwithstanding, and it is forecasted that this trend will continue and even improve in the coming years.
he immense success of Islamic financing methods and the widespread popularity of Sharia-compliant mortgages has prompted scholars and financial analysts to delve into the reasons. But before trying to understand what makes Sharia-compliant mortgages so successful, it is worthwhile to gain a fair knowledge about the Sharia laws that govern Islamic financing methods.
Sharia Laws that Govern Islamic Financing
Islamic financing principles are based on the guidelines laid down by the Sharia, a body of law that is based on the teachings of the Holy Qur’an and the sayings of Prophet Muhammad. While formulating the Islamic financing principles, early scholars were prompted by considerations of justice and partnership; this is easy to gauge from a closer study of the rules. Sharia-compliant mortgages are based on the following laws:
- Wealth must be produced only by engaging legally in trade and asset-based investment.
- All financial investments involved in Sharia-compliant mortgages should be ethical in nature and serve the greater good of the society.
- Risks should be shared by all parties who have entered into a financial agreement.
The financial agreement should not involve harmful activities.