muslim mortgages

kilyas · March 30, 2005, 9:18pm

Re: muslim mortgages

Chat Walla:

yup thats right HSBC do them. They call them Amanah Finance.
Lloyds TSB also started a Muslim Mortgage recently.

Here is an extract from HSBC website which is self-explainatory…

***Amanah Home Finance is based on the principle of ‘leasing’, the ‘Ijarah’ plan lets you buy your residential property without compromising your beliefs. If you already have a traditional interest based mortgage, the plan allows you to refinance your property. ***

***How it works ***
***You choose the property you want to buy and negotiate the price with the seller. Alternatively, you may wish to repay a traditional mortgage and refinance your property. ***
***Contracts will be exchanged either with the person you are buying the property from, or you in the case of a refinance. This will be a binding contract for the purchase of the property. A date will also be agreed when we will become the owner of the property and lease it to you. ***
***Our solicitor will register HSBC’s ownership of the property in its name. ***
***Your solicitor or other legal adviser will register your ownership of tenancy in your name. ***
***You’ll need to make a monthly Amanah Home Finance payment to us for the term of your finance. The payments will be made on the 25th of every month, and will be collected from your account by Direct Debit. Your payment will comprise: rent, on-account payment and building insurance (and any other sums payable for a leasehold property). ***
At the end of the agreed term, and when all payments have been made, you can exercise the promise to sell and we will transfer the property to you. "

The whole idea is how does the financiar the Bank or the finance company make money? Now consider a property today is worth $200,000 you do a Halal mortgage for it. Over the period of 20 years how much would you pay. Are you going to pay $200,000 or $270,000. And if it is 270,000 no matter what you call it it is interest and it is no different from a regular mortgage, so why bother.