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Mortgage Loan
Basic concepts and legal regulationMortgage loan typesLoan to value and downpaymentsValue: appraised, estimated, and actualEquity or homeowners equityPayment and debt ratiosStandard or conforming mortgagesCapital and interestInterest onlyNo capital or interestInterest and partial capitalForeclosure and non recourse lendingUnited States mortgage processPredatory mortgage lendingOption ARMCostsThe United States mortgage finance industrySecond layer lenders in the USCompetition among US lenders for loanable fundsThe mortgage loans industry and marketMortgage typesUK mortgage processMortgage insuranceIslamic mortgages
Basic concepts and legal regulationMortgage loan typesLoan to value and downpaymentsValue: appraised, estimated, and actualEquity or homeowners equityPayment and debt ratiosStandard or conforming mortgagesCapital and interestInterest onlyNo capital or interestInterest and partial capitalForeclosure and non recourse lendingUnited States mortgage processPredatory mortgage lendingOption ARMCostsThe United States mortgage finance industrySecond layer lenders in the USCompetition among US lenders for loanable fundsThe mortgage loans industry and marketMortgage typesUK mortgage processMortgage insuranceIslamic mortgages
Islamic mortgages
The , will pay a contribution towards the purchase of the property. When the last payment is made, the property changes hands.Typically, this may lead to a higher final price for the buyers. This is because in some countries (such as the United Kingdom and India) there is a Stamp Duty which is a tax charged by the government on a change of ownership. Because ownership changes twice in an Islamic mortgage, a stamp tax may be charged twice. Many other jurisdictions have similar transaction taxes on change of ownership which may be levied. In the United Kingdom, the dual application of Stamp Duty in such transactions was removed in the Finance Act 2003 in order to facilitate Islamic mortgages.
An alternative scheme involves the bank reselling the property according to an installment plan, at a price higher than the original price.
All of these methods are still compensating the lender as if they were charging interest, but the loans are structured in a way that in name they are not, but they share the financial risks involved in the transaction with the homebuyer.