Halal Morgage

[Malika]

Brothers and sisters

 

I have been battling with the concept of how halal are these Halal Morgages? I want to invest in a property,but ofcourse cant afford the whole price and for along time had been pondering on taking a morgage.

I have been doing research and had been to the bank, but while the manager was talking, all I could hear was my moms voice, "nayaa waan kuogaa inaa galo galo iskadigtii..hadaa waxaan keentee inaad xaraantaa kudarsatoo".So I really didnt hear much of the ups and downs of Halal Morgages..I know there is Ijara,which sounds ideal.BUT,,,

 

I want to hear your opinion on the matter, and advice.Please enlight the sister!

[Nur]

Munira sis

 

The basic idea of Islamic finance is JUSTICE. In Islam the default of all actions is that they are permitted unless otherwise indicated to be prohibited (Except for Money and Sex, those two, the default is prohibition except for permitted transactions and relationships)

 

Trading present money with larger future money ( Ribaa ) presents INJUSTICE as it exposes undue risk to the needy borrower while guaranteen profit for lender.

 

Trading goods with money is known as selling ( Bayc). A homeowner is permitted to sell a house for cash or in future installments. As an incentive, she is permitted to lower price of cash sale ( Bayc Caajil) and to charge more for series of future payments,( Bayc aajil)

 

Banks in the west convert unIslamic lending instruments to Islamized instruments, and there are many variants of these structured instruments.

 

What you have to look for is

 

1. That you are not exposed to more risk than the lender. ( Risk and reward in Islamic trading must be shared, otherwise it conflicts with moral of the Sharia)

2. Seller is selling own property.

3. Property is real as opposed to a proposed development.

4. The term mortgage is unIslamic, its defined as: A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan. In Islamic Sharia, the Bank buys the property and then sells/rents to you in installments (hence sharing risk and reward), The Bank thus sells to you a property it rightfully owns (holding its deed) in FIXED installments ( No compounding), regardless of amount of profit, if mutually agreed. ie ( Bank buys Present house value @ 200,000 Pounds, and sells to you @ 300,000 Pounds equal monthly payments of 1000 Pounds for 25 years.)

 

Wallaahu Aclam

 

 

That is my two cents, hope it helped.

 

 

Nur