call an interest payment eidi for all I care, its the same thing.
Fact is that you are buying the house and making a payment which increases your equity based on a schedule in that time period..thats what it is, and its the same in conventional or shariah compliant financing. call it whatever.
hazoor..one of my pals was a broker of these shariah complaint mortgages, not because of some love for shariah based financing, but because the job paid well :) i know the system well.
the amount of maneuvers they go thru to make it 'shriah compliant" similar logic can be used for any interest based transaction, even for interest bearingf checking accounts. but thats a whole diff story..
first of all the way u opened the thread was that u dont have any point of view and u wanted to ask questions so that u could get answer and make up ur point of view lol and i mentioned in my very first post that u know more than i do and u also know the answers to the questions and see thats wat u r doing now, arguing on ur own point of view.
now coming back to the topic of shariah financing/ banking.
u have totally confused urself. if u read my very first post i explained that most of the guys in the market are selling u interest based mortgages just by playing with words to make u feel its islamic financing, they are using Murabaha bases in their financing which leads to Riba al nasi'aa and it is haram. if u think m using fancy words aswell then leme explain it to u in easy words , wat they do/ did was that they would buy the house for the market price and would sell u by adding extra huge margin on that, for example the house is worth 200;000, they would buy it for 200,000 and then sell it to u for 500,000 by saying "oh my dear brother in islam its not interest, its just my profit and it is the market value of the house on the time by which u would pay me back the money" it is interest doesn matter wat word they use.
but the model i posted from lariba is different and totally halal and islamic. but just leme mention first that i dont work for lariba nor i intend to do in future, i just pray they come to canada aswell so that i could also get shariah financing.
Now this is wat u said.
"Fact is that you are buying the house and making a payment which increases your equity based on a schedule in that time period..thats what it is, and its the same in conventional or shariah compliant financing. call it whatever."
Now wats wrong with paying the installment and geting ur equity/ ownership increased. now u r playing with words lol, remember wat haram is "renting money" and interest.
Bhai there is a very thin line between interest and shariah financing, actually the line is so thin that sometimes u have to use a microscope to see it and m gona show u that line tonight insha Allah by lending u my glasses without any interest lol.
Islams point of view is that noone can rent u money to get fixed payments on that cuz it is interest. Islam says that if u need money somebody should just give u money without any renting of money or interest, but if it is for business purposes then that guy can lend u money on the partnership bases and both the lender and borrower would share the profit and loss.
now i would appreciate if u please read the above red statement twice so that u have everything clear about that. and i also repeat, in islam u can not rent ur money, u can rent anything but not money, u can rent a car, u can rent an apartment, u can rent a bridal suite but u cant rent money, and if u need money then someone gota do parternship with ya on a condition that he would share the profit and loss.
Now we are gona analyze both conventional system which mirch bhai would prefer and Lariba / shariah system that i would prefer and m gona show conventional is totally opposite to wat islam says and how perfect lariba system is.
In conventional banking if u want to buy a house u would go to ur bank ask em for money and they would make u sign a contract that would say that they are renting u their money and u gota make a fixed monthly payment to pay back ur house plus 7% interest till the house is paid off.
so suppose if ur house is worth 100,000 and ur montly payment is $1000 dollar + 7% yearly interest which monthly would be approx $585 so ur monthly payment would be $1585 per month. and now it wont change, if ur mortgage period is 20 years u gota pay the same 1585 for 20 years out which 1000% is going towards the payment which is increasing ur ownership in the house and that 585 is the interest aka rent on the money u borrowed.
and Bank is not doing any parternship nor sharing profit or loss, which is haram in islam. so if u loss ur job u will have to file bankruptcy and all the payments u have paid go into the bankers pocket, u r back at square one, bank not only takes all the payments but also takes away ur house.
so everything in that system is haram from renting money to fixed payments to no profit loss partnership.
now analyze Lariba/ shariah financing and m gona try my best to show the thin line insha Allah.
now same scenario again and u want to buy a house, instead of going to conventional bank this time u would go to Lariba. they would analyze everything and accept ur offer, but the first thing they would do to make them different from conventional mortgage is that instead of signing renting u the money which is haram they would do partnership with u, now u would ask how, i will explain.
they wont rent u the money, they would do parternship for the same house which is $100,000. U put in down payment of $10,000 and Lariba puts in 90,000. now u own 10% of the house and Lariba owns 90% and u sign the contract that u will pay back 90,000 in ten years and start living in the house, but the problem is that u only own 10% and u r using the whole house and Lariba owns 90% and is not using it atoll, so wat would happen is that u have to pay the rent of that 90% which lariba owns and renting a house is halal in islam. but its not Lariba who decides the rent amount, real estate brokers do, u take qoute from 3 real estate brokers for the rent of that house and Lariba would also take from 3, so now u have 6 qoutes and the one which is most reasonable amongst all, or if more brokers agree on one amount than that is the amount u have to pay as rent. now u would be thinking its same as conventional banking, no its not, there they were renting the money deciding their interest rates and here they are renting the house and independent brokers are decideing wat should be the rent.
so the payment methode would be that suppose if u have to pay back $1000 a month as basic payment which is interest free just like conventional banking, instead of interest, or rent on money u would pay rent on the 90% of the house which Lariba owns and suppose its $600 dollars a month. so $1000 interest free payment and $600 rent would make it $1600 a month. now u would be thinking its almost the same thing, for conventional u were paying $1585 a month and for Lariba u r paying $1600 a month, but thats not the case, in conventional u have to pay 1585 for 20 years, and in lariba first month u paid 1600 hundred but next month u wont pay 1600 cuz next month Lariba doesnt own 90% of the house cuz u have paid em back 1000. so they just own 89%, so ur payment would be $1598 instead of 1600, then next month lariba would own only 88% instead of 89% cuz u paid another 1000 so ur mortgage payment would be 1596, and next month 1594 and next month 1592 and so on. ur share in parternship is increasing and Lariba's is decreasing.
and as islam requires the partner to share the profit or loss, so Godforbid if u lose ur job and have to file bankruptcy ur all payments wont just into vain like it does in conventional banking, u will still own ur share and instead of taking the house from u Lariba would help u sell ur house and when u sell it u get to keep ur 10% or watever ur equity is and Lariba gets its share. isnt it like the best bankruptcy every :)
so now again wat are the differences.
Islam forbides u to rent money.
-Conventional are renting money on fixed monthly payments
-Lariba is not renting money they are renting the house which is halal in islam, aur monthly payments are not fixed they keep on decreasing every month.
Islam tells u to do partnership
-there is no partnership wat so ever in conventional system. and they are just renting money.
-In Lariba its pure partnership, both of u own % of the house, u only pay rent for the % Lariba owns. and each month Lariba's ownership would keep on decreasing.
islam wants to share profit and loss
-Conventional there is no sharing of profit and loss, they keep all the proft. if u have 50,000 in ur equity and u have to declare bankruptcy they would keep ur 50,000 and also take the house from u and sell it and keep that money aswell and u are just like a stinky rat on the street now.
-Lariba doesn take ur house, they let u keep ur house and help u to sell it, both of u find a buyer and sell it, they keep watever percentage they own and u keep ur percentage.