NAIROBI, Kenya, Feb 27- Gulf African Bank has launched a Shar’iah compliant Home Financing Product which will see potential home owners enter a partnership with the bank that will enable them realise their dreams of owning a home.
The bank’s Head of Liabilities Walid Khalid explained that the bank and the customer would jointly purchase the property through the process dubbed ‘Diminishing Musharakah’.
“The customer will pay an agreed amount of rent for using the bank’s share of the property. The customer will then, over an agreed period of time of up to 20 years, purchase the bank’s equity from the property to assume full ownership,” he said.
He added that the rent paid would be adjusted downwards after the purchase of each unit by the customer based on the number of units held by the bank.
“Shar’iah law does not allow the paying of interest which has made the owning of homes for Muslim faithfuls difficult through the conventional mortgage schemes available in the market,” he said.
The Home Financing Product differs from the conventional packages available in the market as rent is only charged after possession of the asset.
Khalid said the client will be expected to contribute at least 30 percent of the total amount while the bank would out rightly pay the reminder.
“The customer will then repay the outstanding sum, and a rental payment, over an agreed term. As a Shar’iah compliant bank, we would not encourage people to take on financial commitments they cannot fulfil thus the need for minimum contribution from the client,” Khalid stressed.