Posted by: islamicfinancingnews | February 12, 2013

Understanding your obligations with Islamic loans

islam41 When you are a potential buyer and submitting an offer to purchase a property, there are certain conditions or subject to clauses that should be inserted in the contract to protect your legal rights, just as obtaining proper Islamic finance will help to protect your spiritual values.

A condition on financing protects the buyer and is one of the most important clauses inserted within the offer. This condition requires the buyer to make a good faith effort at obtaining adequate mortgage financing within a reasonable time frame. If real efforts by the buyer to obtain financing fail by the expiry date, then the offer becomes null and void and the deposit submitted with the offer is returned to the buyer.

Although different lenders vary, arranging for a mortgage usually takes within five to seven business days. Even when you have been pre-approved for a mortgage loan, purchasers are advised to make their offer subject to financing for a very brief period. This allows time for the lender to conduct an appraisal of the property to ensure the purchase price being offered reflects a fair market value.

You should understand your legal obligations before entering into an offer to purchase, just as you should understand your financial obligations when it comes to Sharia compliant Islamic loans.

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