i have read on ask-imam.com website that getting mortgage for house buying is not allowed in islam, may ask why because not everybody can afford to pay up front when buying houses as we all don’t live under the same circumstances.
A large number of scholars have deemed conventional mortgages to be haraam because they involve riba.
However, in the UK, the United Bank of Kuwait and the West Bromwich Building Society offer interest-free mortgages that are Shariah compliant.
HSBC is planning on launching a similar mortgage in the UK in during the next year, and other major commercial UK banks such as Barclays are looking into interest-free shariah compliant mortgages too.
so interest free mortgage is ok
yeah sure...get some Islamic bank to buy a house for u....
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*Originally posted by #let uz chat#: *
so interest free mortgage is ok
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i don't have any islamic banks in the city i live
a scholar in egypt from al-azhar (shaikh tantawi) has actually said mortgage is ok though he was attacked by more conservative scholars. as a minority community in a western land, there are special circumstances. clear your heart and follow whatever path makes most sense. don't get gobbled up in the mindless rantings of the fundies (or the ultra-liberals for that matter)...do what's best for you and your family and what feels right in your heart.
if you haven't already, check out the web sites of lariba (lariba.com) and Guidance Financial (they are via Fannie Mae); they may be right for you...
it's impractical to assume one can pay the entire cost of the home at once (in the US, the average home is around $145,000). Financing has now become a way of life in Pakistan, Egypt, Malaysia, Turkey and many other muslim lands. it's the lifeblood of the middle class. the two biggest things a person needs are a roof to live under and a means of transportation. based on modern income levels, these are unaffordable if paid all at once.
i've never heard of an "interest-free" mortgage.
Thats great i didnt know about it :k:
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*Originally posted by mAd_ScIeNtIsT: *
A large number of scholars have deemed conventional mortgages to be haraam because they involve riba.
However, in the UK, the United Bank of Kuwait and the West Bromwich Building Society offer interest-free mortgages that are Shariah compliant.
HSBC is planning on launching a similar mortgage in the UK in during the next year, and other major commercial UK banks such as Barclays are looking into interest-free shariah compliant mortgages too.
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thats very interesting, never knew you could get ineterst free mortgages in the UK (now you tell me!) but I do have one question....surely everyone is going to want an interest free mortages, are the banks going to require any proof of your religion etc?
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*Originally posted by shahreen: *
thats very interesting, never knew you could get ineterst free mortgages in the UK (now you tell me!) but I do have one question....surely everyone is going to want an interest free mortages, are the banks going to require any proof of your religion etc?
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No, because the banks still make a lot of profit from interest-free mortgages.
Basically, in a conventional mortgage, what happens is that the bank loans you money, and makes money by collecting interest on the loan. Collecting interest on a loan constitutes riba and is thus haraam (as is paying such interest).
Example: You want to buy a £100,000 house. The bank lends you £100,000, and collects interest on this loan. The bank makes profit through the portion of this interest that is above the national inflation rate. Over 25 years, you may end up paying back your £100,000 loan with £140,000 due to the interest rate charged.
If you failt to pay your mortgage, the bank will take ownership of your house and sell it to recoup the money that it loaned you.
In an Islamic mortgage, there are a number of options for a bank. The two most common options for a bank are as follows.
Example 1: You want to buy a £100,000 house. The bank will buy the house for £100,000, and sell it to you for £140,000 to be collected over 25 years. The bank has not lent you any money, hence is not making money on a loan, hence there is no possibility for riba to be paid.
Example 2: You want to buy a £100,000 house. The bank will buy the house for £100,000, and sell it to you for £100,000 to be collected over 25 years. However, since during this time, you are technically living in the bank's house, you pay the bank rent every year in addition to paying the cost of tthe house through installments. In this way, you would end up paying £140,000 over 25 years. Again, the bank is at no point lending you any money, hence their is no possibility at all for riba to be involved in this transaction.
Currently in the UK, the biggest obstacle to Islamic mortgages is the high tex fee charged whenever property changes ownership. In an Islamic mortgage, first the bank would take ownership of the house, and then you would. This makes Islamic mortgages much more expensive than conventional mortgages, as they get double-taxed.
What many commercial banks are attampting to do is the to get the UK government to change the law so that Islamic mortgages are exempted from this double tax. Once this is done, they aim to enter the market for Islamic mortgages.
Thanks alot for the information Mad_scientist, its cleared up alot of things for me.:k:
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*Originally posted by TUMS: *
a scholar in egypt from al-azhar (shaikh tantawi) has actually said mortgage is ok though he was attacked by more conservative scholars. as a minority community in a western land, there are special circumstances. clear your heart and follow whatever path makes most sense. don't get gobbled up in the mindless rantings of the fundies (or the ultra-liberals for that matter)...do what's best for you and your family and what feels right in your heart.
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I've seen this debate. Sheikh Tantawi does actually have a number of fairly prominent scholars who backed him, essentially arguing that not owning a house was a greater evil than having an interest-bearing mortgage, as not having a house may result in you not having secured a place to live once you stopped earning enough to pay rent. They also pointed out that most of the Islamic mortages available were offered by small companies that were not particularly well established and secure, and hence were high risk. The counter argument was that it was better to rent property and risk an uncertain future than pay cent of riba.
However, the pro-conventional mortgage view was proposed several years ago when Muslims in the west were unable to get interest-free mortgages, and is much harder to support now. The increasing access to interest-free mortages in the Anglo-Saxon world means that there is little justification for not taking an interest free mortgage.
For example, one of the biggest banks in the world, HSBC, offers interest-free mortgages in New York State. What justification is there then for Muslims in New York State to take an interest bearing mortgage, when an interest-free alternative is available?
the justification they would give is that the banks provide better rates...though from what i have seen, islamic home financing options are often competitive.
Mad Scientist, so in other words, the Islamic Interest - free bank is ONLY changing the name of interest to rent. What's the difference if you will end up paying 140,000 anyway?. Call it rent ot interest it is profit that the bank is making on you. Doesn't make sense to me.
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*Originally posted by funguy: *
Mad Scientist, so in other words, the Islamic Interest - free bank is ONLY changing the name of interest to rent. What's the difference if you will end up paying 140,000 anyway?. Call it rent ot interest it is profit that the bank is making on you. Doesn't make sense to me.
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No. The legal ownership of the property is different. In a conventional mortgage, you own the house, and the interest-bearing loan is secured against it. The bank only takes ownership of the house if you fail to keep up your repayments.
In all Islamic mortgages, you are living in the bank's house. There no loan of money secured against the house.
You may say that "The end result is exactly the same, so what is the difference?"
Well the answer to that is that one way of buying the house (through an interest-bearing loan) is immoral, whilst the other way of buying the house (through buying the bank's house in installments and paying rent) is done in a completely moral way.
It's like having a child. Having a child through impregnating a woman other than your wife is immoral, whereas having a child with your wife is moral. The end result is the same - it is the means of getting there that makes all the difference.
You can either get to home owner ship though the WRONG way, or through the RIGHT way. You'll get judged for it later.
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*Originally posted by funguy: *
Call it rent ot interest it is profit that the bank is making on you. Doesn't make sense to me.
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Islam doesn't prevent you making profit. It's not Communism you know!!!
Quite simply, the bank making a profit from you through charging you interest is immoral, sinful, and haraam for both you and the bank.
The bank making a profit by buying a house and selling it to you at a higher price is fine, just as you might buy textiles and then sell them on for a profit. It sells you the house in monthly installments, with you taking ownership once you have aid the agreed price.
The bank being your landlord and charging you rent is fine, moral, and halal too. It's simulateously selling the house to you too, collecting payment for the building in installments as above, which is just fine too.
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*Originally posted by mAd_ScIeNtIsT: *
Well the answer to that is that one way of buying the house (through an interest-bearing loan) is immoral, whilst the other way of buying the house (through buying the bank's house in installments and paying rent) is done in a completely moral way.
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So according to you all those people who pay mortgage from their hard earned money are immoral whereas a bank which sells a house for 140K whose market value is 100K is very moral ??
It's even more ridiculous to compare a stupid mortgage with the birth of a Child.
BTW, don't they have FIXED DEPOSITS in Islamic banks ??
Sorry Mad Scientist, but none of that makes any sense. That’s the problem when relying on economic advice given to nomadic desert tribes some 1400 years ago. What is different from the bank making a profit from lending money and any other business venture making a profit? And Asif is right, that comparison to having a child is 
Ok, look, my analogy may be bad, but at the end of a 60 hour (and still rising... I'm typing this on a break) work week you should just try and be able to come up with a better analogy. My point is that you can achieve the same ends by both moral and immoral means.
Now, getting down to specifics.
Asif_k
So according to you all those people who pay mortgage from their hard earned money are immoral whereas a bank which sells a house for 140K whose market value is 100K is very moral ??
You argument is almost as bad as my "having a child" analogy! Any successful economy is based, on the end of the day, on a "buy-low sell-high principle". The bank buying the house and selling it you at a higher price is morally no different from a car dealership buying a car from a manufacturer and selling it on to you via hire-purchase for a higher price. The only difference is you can live in a house and not in a car (unless you're a street bum, I guess).
And would you say that it is represents a higher quality of morals when a conventional bank lends you £100,000 and demands back £140,000 when you include interest? By what logic is that more moral than a bank buying a house for £100,000 and selling it to you for £140,000?
My argument is that by religious logic, the bank that charges interst and the person who pays it is being immoral.
Seminole
I think that your argument that "What is different from the bank making a profit from lending money and any other business venture making a profit?" represents nothing more than a simple clash of perspective between Islamic and modern-day Western standards.
Islam deems making money by lending money to be immoral, whilst making money from nost other business ventures is moral.
Time for another bad anology (I'm into my 62nd hour at the office today.. woohoo...brain dead...need coffee...)
It's like saying what's the difference between having sexual relations with a woman before getting and doing the same thing after getting married married.
In Islam, one is immoral, and one is not. By modern-day Western standards, neither is an immoral act.
what difference does it make if your money is "hard-earned" or not, according to Islamic law, you cannot make money on money. this is established. yes it flies in the face of traditional banking but one must admit that it the present system is repressive. if a person borrows $100,000, he will have paid over $200,000 after 30 years. now it's true that financing has taken a foothold in pakistan, Gulf countries, Turkey, Malaysia and other nations. so in the end, it's your decision, if you can justify it to yourself more power to you. most muslims think twice before doing it at least...