ISLAMIC HOME FINANCING BASE ON DEBT: A REVIEW OF PRACTICES OF ISLAMIC BANK IN MALAYSIA

Abstract

Nowadays the dual banking system in Malaysia has enable banks to offer two forms of home financing method, the Islamic home financing and the convensional home loan. As we know a house is a everyone needs. They will get by all means by purchase it, renting or build the house themselves. Islamic home financing product is one of the sources that generate profits for the local and foreign Islamic bank in Malaysia. Thus, very few people can afford to purchase a house on a cash basis. As muslim consumers, it is important for them to choose wisely on their financing. This study attempts to analyse the practice of Islamic home financing product base on debt in Malaysia since 2000 till 2016. The study is motivated by few shortcomings of current Islamic home product as well as an increasing the number of shariah instrument contracts among Islamic banking in Malaysia. Islamic home financing in Malaysia can divided into two types, which is debt and equity. Bai bithaman ajil (bba) is the most marketable mode of home financing in Malaysia since 1983 but nowadays, many Islamic banks in Malaysia was accepted musyarakah mutanaqisah (mm) and tawarruq as an alternative to bai bithaman ajil. This study uses a qualitative approach. The paper would survey the practice on Islamic home financing in Malaysia base on debt since 2000 until 2016.