Mortgage!!

Society Religion & Philosophy
1

I am sure there will be quite a few threads on this topic already but I cant seem to find any :bummer:

So basically me and my man are in a bit of disagreement…Its almost impossible for us to buy a house on cash for another 10 years and we must take mortgage out in order to buyone in near future…
Now I know interest is haraam and totally against Islamic rules…I have read/heard different Aalims have different takes on this issue…While some says its okay to take one out of necessity others are totally against it…Mr wont budge until he is totally satisfied and have neutral opinion in its favour…He don’t like fatwa shopping(his words :bummer:)

Can anyone please share neutral Aalims fatwas and whats their take on it…And if Islamic mortgage is worth it?

2

Re: Mortgage!!

No one? :bummer:

3

Islamic mortgage is not worth it. It's just a drama, basically they labeled regular mortgage as Islamic mortgage, and it's more expensive than a conventional mortgage.

I can give you my take on this. If you are going for a thirty years fix mortgage, and not arm or flexible, then I think it's ok. In Islam, it's ok for a seller to ask for more price if you're buying on installments. It's ok for bank to say that this 400k house is going to cost you 800k if you're going to pay it off in 360 months. Totally halal in my books.

4

Re: Mortgage!!

Speaking as a Realtor, I totally agree with TLK Bhaiya, the so called Islamic mortgages are not worth it, they are no different from a conventional mortgage and are just masking their practices with saying that you are "renting shares".

I just had a closing today for a client who got a fixed mortgage rate of 4.12% on a 30 year loan. That is practically free money. I'm not a scholar, but in my personal and professional opinion, the concept of usery (which I totally get is haram) and a fixed rate mortgage, especially at the historic low rates right now are two completely different things.

Like TLK Bhaiyya said, it's a fixed profit. As long as you don't get into something that is adjustable rate I see it as totally halal.

5

Re: Mortgage!!

Thank you guys!! I dont think you can get fixed mortgage for the whole repayment period in the UK...the standard is initial 6 years If I am right...I need to check with the bank though

6

Mortgage!!

You can keep on fixing your mortgage rate as you go along. And if stick to repayment only not just the interest option. When we got financial advise they said initially you can fix for two years then they review and then again etc its down to the banks and how they value you as a customer it is negotiable this was with Halifax. Wev held off on buying at the monent as its so difficult and confusing what to go for i want a good family home we dont have kiddies at the moment so much stress! Lol good luck!

7

Re: Mortgage!!

The option that TLK have given is related to sale purchase on cost plus basis and i dont think any bank/seller will take the exposure for that much years.

If the Islamic mortage is based on some islamic mode of transaction(ijarah/diminsihing musharaka etc) then although greedy bankers may charge you more it is better to take it rather then going for riba based/qard based modes.In effect it is not that much costly as under islamic mode the financer is exposed to the risk of property as against the conventional financing, so they may add a premium for that risk as well.

8

Re: Mortgage!!

Firstly we must know what Mortage is ?? It means taking advantage of someone's constraint/compulsion/helplessness for buying anything...

Mortgage is totally haraam unless it's based on True Islamic Rules... no other option.. ISLAM have no flexibility on this topic... today's Mortgage system is based on Usury/Sood as you have to pay more than the Original Price/Worth... what else Usury can be ?? you buy house, lease a car, or buy any thing having interest is all counted under usury hence forbidden..

YES these ways makes life more easy, but our Lord havn't allowed us to earn that.. so we must think about it,

Sood ALLAH se seedhi jang hai...as ALLAH says in Quran...

Allah has permitted Trade (commercial deal) and forbidden usury. [Al-Baqarah: Verse # 275]

&

O you who believe! Do not devour usury, making it double and redouble, and be careful of (your duty to) Allah, that you may be successful. [Al-Imran Verse #130]

so if you are taking advantage/ease then it's Haraam..

and regarding to this so called Islamic Mortgage.. this is how it works: If Whisly is Haram but someone makes a bottle with "Islamic Whisky" - would it be Halaal ?? the answer is No...

9

Bao in principle I agree with this, but all lenders, whether Islamic or conventional, are backed up by same banks who are loaning the money to lenders through same interest based system. You can call that loan anything on the front end, but at the back end it’s the same soodi nizam

10

Re: Mortgage!!

This is mortgage repayment calculator for MCCA, Australia. Whats the difference in terminologies? For me they all seem the same to ordinary banking. They use a term called Rental facility instead of Interest and then they still have variable and fixed Rental Facilities available.

Build a home - MCCA - Islamic Finance & Investments | Islamic Home Finance Australia| Shariah Compliant| Halal Finance| Muslim Finance| Islamic Investment

[TABLE=“width: 581”]
[TR=“bgcolor: #FFFFFF”]
Full Doc

**Self Certified
**

[/TR]
[TR=“bgcolor: #D4D4D5”]

Tamleek Standard Variable

Tamleek Standard Fixed

**Tamleek **ProPack

Tamleek Variable

Tamleek Fixed

[/TR]
[TR=“bgcolor: #8B8C8E”]
Description
Standard Variable

Fixed for 2, 3 & 5 years

Reduced Standard Variable

Standard Variable

Fixed for 2, 3 & 5 years

[/TR]
[TR=“bgcolor: #D4D4D5”]
Rental Facility Rate (p.a)
5.42%

**2y 5.26% **
**3y 5.36% **
5y 5.79%

5.32%

5.82%

2y 5.66%
3y 5.76%
5y 6.19%

[/TR]
[TR=“bgcolor: #8B8C8E”]
Comparison Rate (p.a.)¹
5.49%

2y 5.48%
3y 5.49%
5y 5.67%

5.69%

5.89%

2y 5.87%
3y 5.89%
5y 6.18%

[/TR]
[TR=“bgcolor: #D4D4D5”]
Maximum LVR
50K-1M≤90%]

50K-1M≤90%]

50K-1M≤90%]

50K-1M≤80%]

50K-1M≤80%]

[/TR]
[TR=“bgcolor: #8B8C8E”]
Principal & Rental Repayments

√

√
√

√

√

[/TR]
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Rent Only Repayments ²

√

√

√

√

√

[/TR]
[TR=“bgcolor: #8B8C8E”]
Weekly/Fortnightly/Monthly

√

√

√

√

√

[/TR]
[TR=“bgcolor: #D4D4D5”]
Annual Fees

nil
nil
$330
nil
nil
[/TR]
[TR=“bgcolor: #8B8C8E”]
Split ³

up to 4

up to 4
up to 4
up to 4
up to 4

[/TR]
[TR=“bgcolor: #D4D4D5”]
Redraw

√

X

√

√

X

[/TR]
[TR=“bgcolor: #8B8C8E”]
Redraw Fee^

nil

N/A

nil

nil

N/A

[/TR]
[TR=“bgcolor: #D4D4D5”]
Settlement Fee*

nil

nil

$275

nil

nil

[/TR]

11

Re: Mortgage!!

At secondary or tertiary level may be they are backed up by some interest based system but does that makes a transaction invalid?

See conventional financial intermediaries work on borrowing money and then lending it to consumers,Sharia compliant ones just take the money from depositors on mudaraba basis and then finance it through some islamic mode, the financing normaly is not done by backed up amount but through the deposit generated.(i dont have exposure of how these FIs work in US or UK )

There is another thing related to risk that is not shown up here, if the sharia compliant company is taking rent then it is also exposed to the risk of property loss in relation to the percentage of property owned. This is not the case of conventional and although to a layman they seem to be similar this is the decisive difference.

12

Re: Mortgage!!

One good thing is that Muslims have started thinking on the lines that they have been left behind as they don't have an alternate. Islamic banking has to develop within the conventional banking existing in the moment, if they keep on researching I hope in a few years time we'd have a much more advanced format of islamic banking.

13

Re: Mortgage!!

and there are many teams in pakistan working on a more sharia compliant model.

i know Team of Moulana sohail of raiwand ( islami tariq tijarat project) Shaikh hashim(an american revert scholar) of karachi(al aboodia project)
Shaykh Umer vadillo (dirham and dinar project)

and there are many others as well. So yes inshallah there are efforts to improve and reduce dependencies on fractonal reserve system and interest rate benchmarks.

14

Re: Mortgage!!

^ if you have got any further information, links on the Islamic Banking model that is being implemented. I think it would help me and others who visit this forum.

15

Re: Mortgage!!

Fortunately i have invovled with all the three teams at one point of time or other.I once shared the document @my blog, now it is not online due to some reasons.

i will try to write about these alternative models of islamic economy inshallah in future.

This is what Shaykh umer vadillo and his team thinks
October | 2013 | Gold Dinar and Muamalat by Shaykh Umar Vadillo

Give me some time and i will write about the other two projects.