Abstract
Bai’ Bithaman Ajil (BBA) house financing concept was introduced in Malaysia by Bank Islam Malaysia Berhad (BIMB) upon its establishment in 1984. The product is an alternative to the conventional housing loan offered by most conventional banks as it is said to be Shari’ah compliant and free from the elements of riba’, gharar and maisir. Since its introduction, many views, studies and comments have been made on the concept of the product which is claimed to be unacceptable by other Muslim countries. As an alternative product to the conventional housing loan, the BBA house financing need to be enhanced and stand at par to remain competitive. Over the years, controversial cases on BBA house financing have emerged and are increasing in numbers. This posed problems to the consumers, financiers and also the regulators. To overcome this, Musharakah Mutanaqisah (MM) house financing concept was introduced by the Islamic financial institutions (IFI). This paper aims to identify both Islamic concept of house financing and provides insight of the pros and cons. Key words: Islamic house financing, shari’ah compliance, Bai’ Bithaman Ajil (BBA), Musharakah Mutanaqisah (MM).
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