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WHAT IS DIMINISHING MUSHARAKA?

Types of Shirkah

Shirka-tul-Aqd

Shirka-tul-Milk

SHIRKAT-UL-AQD Which means a partnership effected by a mutual contract. SHIRKAT-UL-MILK It means joint ownership of two or more persons in a particular property.
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WHAT IS DIMINISHING MUSHARAKA?

Diminishing Musharaka is Based on Shirkat-ul-Milk. Diminishing Musharaka refers to a contract where share of one party in a particular jointly owned property diminishes over time. Three Major Steps in Diminishing Musharaka
 Joint ownership of the Bank and customer  Customer as a lessee uses the share of the bank  Redemption of the share of the Bank by the customer

and payment of rentals.

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Diminishing Musharaka Finance Vs House Loan

Diminishing Musharaka House Loan

Bank and Customers are joint owners of the property and all ownership related expenses are proportionately borne by both. Lease Agreement between Bank and the Customer for use of Banks share in jointly owned property. Bank proportionally share all losses in property as joint owner.

The property is solely owned by the Customer and pledged in favour of Bank as collateral The Bank only charge interest on money borrowed.

Bank does not participate in case of loss of property.

JAZAKUM UALLAH