Effect of the guidelinesīefore this, you could refinance your house up to 90% of its market value. Psychology.This guideline is part of Bank Negara’s efforts to reduce unnecessary household debt, and also cools any speculative activity in the property sector that is fuelled by lax home loan refinancing. From the findings, several suggestions have been recommended in order to refine the implementation of this contract. These include issue of ownership between a customer and a bank, where's a bank is shared owner of the houses and also the problem of determination of the house's price that is to be refinanced. Findings from this analysis reveal that there are few issues arise as a result of the implementation of the Musharakah Mutanaqisah contract particularly in refinancing home mortgage. Meanwhile, in analysing the data, different methods of analysis including inductive, deductive and comparative methods have been adopted. Interviews were conducted in the abovementioned banking institutions. In conducting this research, a fully library research and interview surveys have been utilised in collecting the data. In addition, this study is also to answer the main question of the existence of Inah element which is regarded as an important component in Mu'amalat. Among other objective of this study is to clarify the question about the possibility to refinance a house if the contracts are occurred in two different banks for example, from RHBIB to MIB. This study focuses on the two major banks that already applied the contract RHB Islamic Bank Berhad (RHBIBB) and Maybank Islamic Berhad (MIB). Since the contract is still in the early stage of implementation, it is the aim of this paper to critically analyse and explain the foundation, concept and the application of the contract that is applied in Home mortgage refinancing. This contract has been practiced by selected Islamic banks in Malaysia. Thus, anew instrument has been introduced which is Musharakah Mutanaqisah contract. However, in the recent years, there have been criticisms that questioned the aforementioned instruments in financing or refinancing a house. Among the instruments that widely practiced are Bay'Bithaman Ajil (BBA), Ijarah and others. It depends on the requirements and needs of a particular Islamic banks/financial institutions. The implementation of home financing in Islamic banking system in Malaysia adapts various forms of Islamic financial instruments.
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