Izhar wants to buy a house in Taman Fulawa. The market price of the house is RM500,000. He is interested to get an Islamic home financing through Bank Hasan. There are two types of home financing offered which are Musyarakah Mutanaqisah and Al-Bay’ Bithaman al-Ajil.

 

For home financing of Musyarakah Mutanaqisah, the bank and client will share initial capital according to the ratio of 80:20. Profit-sharing ratio depends on the capital contribution. Monthly payment is RM3,000 where the bank’s profit from the house rent in the first month is RM1,600.

 For home financing of al-Bay’ Bithaman al-Ajil, the bank gets a profit of 65 percent. The financing tenure is 35 years.

 

(a)Assume that  Izhar chooses home financing through al-Bay’ Bithaman al-Ajil. How much is the monthly payment that should be paid by Izhar?

(2 marks)

 

(b)Assume that Izhar chooses home financing through Musyarakah Mutanaqisah. Calculate the payment process that shows the increase in Izhar’s ownership of the house for the first four (4) months.