Home Financing Under Islamic Banking

The major reason for the current financial and economic crisis in America is said to be a rash of Bank failures. And Bad Home Loans are said to be the major reason for the Bank failures in the United States.

Quite simply, American Banks had been over financing home buyers. Suppose a potential home buyer approached his Banker for a home loan, and his credit rating and financial standing would entitle him to a home loan of, say, USD 100,000.00, his Banker would gleefully advance him say USD150,000.00! Naturally this borrower would not be in a position to repay the stipulated installments because of his lower repayment capacity. This would eventually lead to a default on part of the borrower, rendering his loan account a non performing asset.

In the light of the Banking crisis in the United States and also in Europe, it would be worthwhile and also interesting to have a look at the home loan financing scenario under the Islamic system of Banking.

Typically, under the Islamic Banking system, home loan financing is based on the principle of Profit Mark Up on the cost of the property, by mutual consent of the Bank and the Borrower. This type of financing is usually done under the contract of Murabaha.

It goes like this. Suppose you are interested in buying your dream home (who's not!). You approach the Islamic Bank with your requirements with regard to the financing. The Bank in turn would assess your requirements as well as evaluate your eligibility for the financing based on your income and repayment capacity. After taking an overall view of your financial standing and credit rating, the Bank would fix a eligible amount of home loan for you. Let us say the Bank fixes a home loan limit of USD100, 000.00 for you.

This amount would include their mark up on the cost of the property. This mark up is fixed by mutual consent. Suppose the mark up is say USD 10,000.00. That means the net amount of your home loan is USD90, 000.00. The next step for you, the borrower, is to identify your dream home in the range of USD90, 000.00. After that you give details of the property thus identified to the Bank, who in turn will negotiate with the owner of the property and make a purchase of the same specifically to sell it to you.

The next step would be to complete the formalities in regard to documentation etc., after which you get the possession of the home, though you are still not the owner of the same. The ownership will vest in you once you repay the stipulated number of installments within the repayment period fixed. Then your dream home becomes really yours!

The main characteristics of the above type of home loan under Islamic Banking are: a proper evaluation and assessment is made of the repaying capacity of the borrower and fixation of the appropriate loan amount. Another notable feature, which is in fact the bedrock of Islamic Banking, is the absence of Interest on the loan amount. Instead the Bank adds up a profit margin to the cost of the asset and divides the total amount into equal installments payable usually monthly.

The above example is a simple type of home loan under the Islamic Banking System. Within this system, variations are possible to suit the specific needs of the borrower.

How to Get an Advance Loan to Do Your Christmas Shopping

With Christmas just on the horizon, people are already buying presents and planning their celebration. Christmas loans are not a good idea because you don't want to be making debt that has to be repaid in the New Year. What you should be looking for is how to get an advance loan in order to do your shopping before the mad rush starts.

Short term payday loans are the way to go to get an advance. They offer competitive interest rates and an easy repayment option. With this type of loan you are looking at the following:

· Amounts of between $100 and $1500 in the US or £80 and £750 in the UK;

· No collateral required;

· Instantaneous approval;

· No co-signer needed;
· No faxing necessary;

· Bad credit scores ignored;

· Money wired to your bank account within 60 minutes.

There are no restrictions to what you can do with the money. You can pay for your Xmas vacation or buy Christmas presents, or just simply pay your bills. The payday loan lenders like to build up a positive relationship with people, so once you've qualified for your first loan with them, you can re-apply, month after month and qualify for a higher loan each time.

The only requirements are to get an advance type loan, is that you have to be over the age of 18, a full time employee with a regular pay check, and a resident of either the US or UK. You can get your shopping done before the prices go up this winter and the Christmas shopping mad rush starts. Merry Christmas.

Traditional Banking Vs Online Banking

Internet banking works in a similar manner to traditional banking, the major difference being the way one is making payments, accessing his account and personal details, and reconciling statements. Rather than visiting the local branch of his bank, the customer uses his computer to complete transactions. Internet and traditional banking have their pros and cons to consider. The choice of online vs. brick-and-mortar banking is often based on one's lifestyle and priorities.

As a major advantage of internet banking, the customer can accomplish multiple tasks in the comfort of his home. Efficiency is what makes online banking attractive to customers: they can pay bills, move money between different accounts, check multiple accounts, and much more. Banking is fast and saves customers valuable time. Transactions are completed in seconds and one can print out the receipts for his personal records. The customer may access his account at any given part of the day, even during weekends and holidays. Moreover, the online account may be accessed from any place around the world, provided that internet connection is available.

Online bank accounts make banking expedient, convenient, and inexpensive. Many banks charge fewer fees for the online banking services they offer. Furthermore, banks have higher interest rates on savings accounts and certificates of deposit, and offer more financial services and products. Customers don't need to buy envelopes and stamps, run to the post office at the last minute, and risk being late on their payments. Monthly bank statements and bills can be accessed electronically. Finally, online banking employs sophisticated tools that help manage one's money and accounts with ease. Despite increased security measures and the availability of anti-virus and anti-spyware programs, identity theft is still a concern. Other threats associated with online banking include phishing and hacking of online accounts.

Time is among the precious commodities, especially for multi-taskers. On the other hand, some people prefer to visit their local bank and interact with the teller in person. Customers can turn to the bank's special account representative or even to the bank manager. Clients are physically present when cash is handed over to them and when they place valuable items in their safety deposit boxes.

When customers hold their money in banks, they expect to have them available when required. The Federal Deposit Insurance Corporation offers coverage of up to $100.000 if banks cannot cover their clients' accounts. Most banks have increased the level of security by installing more surveillance cameras and hiring a larger number of security guards. With traditional banking, customers are better protected against identity theft. However, security is still a concern with traditional banking. While criminals cannot hold a gun to one's personal computer, they can rob a bank the traditional way.

Inconvenient locations, fixed schedules, and more limited financial services are some of the disadvantages associated with traditional banking. In contrast to internet banking, customers opting for traditional banking services need to draw money before using it.

The FDIC (Federal Deposit Insurance Corporation) pays up to $100,000 of coverage, in case that a bank cannot cover its accounts (both online and traditional). However, protection from identity theft is an aspect of banking that traditional banks take better care of.

Types of Loan - Know Your category

There are many types of loans available and it is often difficult to know which loan method is best for you and your circumstances. This article will help you identify each loan type and the basics of each package.

Secured loans offer a higher rate of lending as they are secured by an item of value. The item that the loans are usually secured by is the home of the borrower. This means that if the repayments are not met, the borrower could lose their home. There are advantages to this loan. As the lender has security from the home which has been signed against the loan, the interest charges and loan repayment can be lowered. This provides a convenient method of repayment to the borrower.

Unsecured loans are generally offered in lesser amounts to a secured loan and do not have as long a repayment scheme. The borrower does not have to sign anything against the loan so they will lose less if they cannot meet the repayments. The lender has more to lose in this situation and may be more reluctant to give out a loan.

Home loans are loans offered to help borrowers purchase a house. The other, more common name for a home loan is a mortgage. In this situation the money is not given to the borrower, it is transferred directly to the person that is selling the house. A deposit is generally required for this type of loan. The deposit is usually around 10% however more is often required during the difficult financial times. If you do not meet the repayments you may lose your home as it will be repossessed.

Debt consolidation loans are used to help customers minimize their debts into one lump amount. Many people have a number or credit cards and other debts. A debt consolidation loan will pay off all of your debts, leaving you with only 1 company to pay back, which is your loan company. A repayment plan will then be set up so that your debt can be paid off.

Now that you are aware of the basic loan types and how they work, you should be able to make a decision more easily about the type of loan you want to take out.

How Do You Choose the Right Financial Investment Company?

Many investment companies are likely to make a number of promises to the prospective clients - such as guaranteed growth and a prosperous future. However, intensive research can be required to ensure that an investment company has a direct relation to your financial aspirations and your work ethic.

Through intensive online research to local investment companies, you should be able to find a company that has the reputation you are seeking: providing their clients expert advice based upon both technical and fundamental analysis, in addition to more personal knowledge on what has established some of the key companies of the stock market in the first instance.

Different financial investment companies also have different methods when it comes to making moves on the stock market, and this can also determine how well the company's investments perform in different market scenarios - such as booms and slumps. Through analysing the returns that investment companies have made in both prosperous and adverse market conditions, you can soon begin to establish a trend on how experienced an investment company is in getting results for their clients. Through talking with companies that have also invested with a firm, you can also get an idea to what their thoughts are as clients.

Even though no one likes to think pessimistically, you want to ensure that you opt for a financial investment company that has precautionary measures in place should things take a turn for the worst - such as Britain's Black Wednesday in 1992. Contingency funds can protect you and your assets against adverse market conditions - an insurance which any good investment company should provide.

Of course, looking at just one financial firm can be naive, and it can prevent you from capitalising the most possible from the funds you have to invest. By trying to find other firms that operate similar investment services in the locality where you live, you can soon see which firm is the most viable and sustainable option for you overall - and from there, progress can be made.

One last thing to consider when choosing a financial investment company is how you want to conduct yourself when working with them. If you like to have an active involvement when trading your assets, it can be important to get a firm that has consultants and channels where you can make your wishes known.

However, if you trust the informed opinions of the brokers working within a firm, a more passive agreement may suit you more. Try to research which agreements firms have worked upon in the past, as this way you will be able to ensure that your activity goes without any unneeded complications.

There is no one-size-fits-all plan in finding the right investment company. But to ensure that investments go well, you need to invest your time in getting the right arrangement for your needs.

Six Steps in Avoiding Financial Investment Fraud

Filtering legitimate financial investment advisors from the confidence tricksters can be quite a daunting task. Take control of your finances and watch out for the following the main steps of avoiding investment fraud:

1. The 'Set for Life' Promise.

Financial Investment professionals are well aware of the unpredictability of financial markets and how to manage consistent returns. An investor that approaches you with promises of huge payouts that will fix all your financial woes is suspicious at the very least. If it sounds too good to be true it probably is. Trust needs to be earned so resist the urge to invest large amounts from the get-go. Start with conservative investments and build a relationship over time.

2. Beware of Time-based Pressure.

Be wary when you are being pressured to make a decision on the spot. The fear of missing out on an opportunity is often manufactured by the swindler himself/herself. Good financial payouts do not happen overnight so neither should good financial planning.

3. Make Yourself Familiar with all the Details of the Proposal.

Be especially careful if you are unfamiliar with investment and money management. Intelligence is not a factor here. Many smart people have fallen victim to financial fraud due to skimming over the details instead of actively picking apart the investment process that will be used. If the process cannot be explained in everyday language that you can understand it would be best not to go forward.

4. Check the References.

Checking references does not necessarily mean checking client references. All investment brokers need to be licensed. Con artists often provide overly-technical descriptions whilst skimming over details regarding their legal affiliations. Even if a potential investor supplies a financial regulator registration number you need to go one step further and check their credentials with your region/countries financial regulator.

5. Remember that Con Artists are 'People People'.

Con Artists are experts at winning confidence with a combination of great financial jargon and good manners. They are also great at playing on natural human reactions by taking advantage your own politeness. Never feel like you owe someone your time. If you are uncomfortable you are allowed to cut off the communication channels at any given time.

6. Stay In the Loop and Keep an Eye out for Suspicious Behaviour.

You may be tempted to leave your investment management to the 'professional' but your money will always be your responsibility. Request frequent reports (at least monthly) and query all the details of your investment. Once again polite behaviour does not pay off. You are entitled to know what is happening with your money. If you feel uncertain of how an investment is going test the waters by trying to withdraw a small amount of the investment. If your payout is being delayed or you start getting vague excuses you may want to reconsider your investment or check this suspicious behaviour to financial regulators/associations.

Financial Investment can be greatly rewarding if you choose an experienced and reliable service provider. There is no quick fix for financial freedom but the old adages remain. Save and invest consistently and cultivate financial discipline. Be vigilant and educate yourself to guard your investments. And lastly, do not let fear or greed become your motivators.

Profiting From Offshore Banking and Arbitrage Loans

Protecting your personal and financial freedom, wealth and privacy should be a major focus for any investor. Naturally offshore asset protection is an important component of that. A balanced portfolio would include both offensive (or should I say proactive) and defensive strategies.

The key thing to realize is that it's not enough just to make money. In the current environment, your dollar, pound or euro balance could be going up - but you are still losing money... due to the ongoing devaluation of fiat currency!

This is likely a new thought to many. With a bit of research you will quickly discover the connection of the value of gold in relation to fiat currency like the dollar, which is backed by nothing but the declining faith and credit of the US government! This information is particularly relevant today as gold has just burst through the $1,050 mark!

You might have heard of 'forex trading' - a way you can make or lose lots of money very quickly. Big banks make big money on forex. But most individual investors I know of who try it end up losing their shirts. And more than a few of the forex trading sites out there that promise you huge returns are forex trading scams. Bottom line, it's not for average investors like you and me who have other things to do besides trade.

But there is a little-known variation on forex trading that is known as the 'currency sandwich' or 'arbitrage loan.' This is still speculative, but is something you can leave on its own and just monitor in say ten minutes, once a week.

Some European private banks  have been offering this for years, but the vast majority of investors have never heard of it.

The key thing here is that you can get a 100% offshore loan, available to anyone, regardless of credit history. You can borrow money from an offshore bank at say 2% interest with no scheduled repayment date, then turn right around and invest it simultaneously for 10% - 30% a year return. In other words it's a classic way to make money using other people's money...!

How does this work? Is it a good idea?

Once you've established a relationship at the right bank, they will arrange for you to borrow money in currencies like Swiss Francs, Yen or Dollars where the interest rate is very low. Then you invest the proceeds of the loan in buying fixed income products in currencies like New Zealand Dollars, South African Rand or Hungarian Forint.

Let's say you agree a five times leverage with the bank. If the initial deposit is $100,000, you get a loan of $500,000 making a total of $600,000. This can then be invested in a pre-defined diversified portfolio of instruments like bonds or CDs.

There are two ways you can gain - or lose. There's the exchange rate factor: raising a loan in one currency and investing in another can lead to huge exchange rate gains as wells as losses. For example if you believe the US dollar will go down relative to the Aussie dollar, you might borrow in USD and then invest in AUD, looking for 'capital gains' on the currency.

Then there's the interest rate factor: Investments are made in bonds - often government bonds - which pay a much higher rate of return than what you are paying in interest on the loan, leaving a profit there.
Given the right market conditions, this deal gives you the possibility of making extraordinary profits. The more volatile the markets - the more your profits can be.

The downside, obviously, is that sometimes such deals go against you - basically if you get the market wrong.  However you don't generally get completely wiped out, because it's very rare for these currencies to devalue overnight.

The next question of course is which banks offer this type of loan? There are many options available, but those are not necessarily always the most confidential and if you happen to be a US citizen, you may find the reporting requirements an unwarranted intrusion on your privacy. As I said, there are a number of lesser-known European private banks that will offer this kind of deal - even to USA citizens provided the accounts are  are established via offshore vehicles. A cheap Panama corp will suffice here since the goal is not tax planning but simply asset protection and opening up new opportunities.

In order for this to work, you must know who to ask, and how to ask (discreetly). I wouldn't go so far as to say these deals are only available to insiders, but they are not available to people who walk in off the street - or the internet. That's the reason there are no banks named here.. Then these high level private bankers would be flooded with e-mails from wannabees and tire kickers who don't really understand the deal.