Halaal Morgages

[mz-alpha-soup]

Is there such thing az a true Halaal morgage? Isn't it only that they intend for the 'Halaal' bit to get our attention but infact have a 'hidden' agenda? Don't they have the insurance 'hidden' somewhere in the cost of the morgage?...Am asking this because it is too good to be true

[Castro]

Am asking this because it is too good to be true

Possibly. I looked at this a few months ago and couldn't quite understand what the difference between a halal mortgage and regular one was. In the former, the bank buys the property then you pay the bank in fixed installements plus rent for the use of the property. In traditional mortgages, the bank gives you the money, you "buy" the property but really the bank owns it. You then pay the bank a fixed amount plus interest.

 

It seems to me that interest has just been replaced with the word rent. It further seems that this a "feel good" strategy to muslims who are uncomfortable with interest to get mortgages. But I'm neither an economist nor a sharia scholar. I was simply reading the definition of a halal mortgage on Lloyds and HSBC's sites.

 

Maybe someone with better sharia knowledge could shed some light on this.

 

Ofleh

 

P.S. Does a halal mortgage mean those with nasty credit can get to buy a house too?

[mz-alpha-soup]

It seems to me that interest has just been replaced with the word rent. It further seems that this a "feel good" strategy to muslims who are uncomfortable with interest to get mortgages.

Exactly my thought....

and i dont think they would help anyone that has bad credit to get house, which leads me back to my initial thought that there is no such thing as a halaal morgage its just a farce

[Animal Farm]

Its funny this has been a debate among many young Somalis who are entering the workforce. Some have argued that its permitted to mortgage homes when you live in a kufar country – other have argued that it’s a huge no no – and at one lecture it was said that taking Riba the smallest amount is equivalent to you sleeping with your mother in the Kacba.

 

There are mixed attitudes about this issue – but I have seen many Somali families who have mortgaged homes – not to mention there are Financial institutions which offer riba free mortgages – but there’s a catch – they charge you whatever you have paid in Riba in advance – so the question is, is it ethical/acceptable?

[Rahima]

Often many of the Muslims who justify the taking of riba (usury) based mortgages do so under the stance of claiming that it is daruura (necessity), however it must be known that to own a house in the west or anywhere in the world is not a must, one can always live happily by renting. This of course will mean that an individual will perhaps never have the pleasure of owning their own property; however they have not fallen victim to the traps which put their akhira and attempt of attaining jannah in jeopardy. I personally have never come across any of this group (which justifies the first home) which provide sound proof-it is based on their caqil and opinions which we know have their downfalls. We need proofs from the Quran and Sunnah.

 

On the other hand there are those who stand by the belief that riba is not a must in todays society and can be avoided-we know this to be true. One can live as I’ve said quiet happily without taking interest based loans. Likewise we also know the Islamic stance on Riba hence it baffles me when people try to justify it. This as pointed out by Animal Farms seems to be the common trend for some of the young educated Muslims who want to compete with their kufaar counterparts in all ways, however they seem to at times forget that we are different from the Kufaar for we have restrictions as stipulated in the Qur’an and Sunnah.

 

For those who are confused about the Islamic system of borrowing, allow me to quote from a previous topic on SOL:

 

You are renting the portion of the house which does not belong to you. They have a right to receive rent on their portion considering that you are living in it.

 

e.g. Say you bought a house for $100,000, paid 10,000 upfront. Also, the market value of rent in your area is 100 per wk. You would be paying 90 per week considering that you own 10% of the house and hence do not need to pay rent on your portion.

 

If in a years time for example you paid off another 10,000, this would mean that you own 20% of the house and they 80% which you have to pay rent on, and hence your rent drops to $80.

 

If in another 6 months time you came across great fortune and were able to pay another 30,000 towards the house, this would mean that you would have only 50,000 left to pay, hence you own 50% and the bank 50% of the house. Therefore, the rent drops down to only $50 a week.

[-Serenity-]

The way I see, there is simply no way to go around interest in today’s society. Whether they call it ‘interest’, ‘service money’ or ‘rent while you buy’.

 

The only way to avoid it all is to forgo owning your own property i.e. renting out for life. But this poses its own problems – you could loose your job, retire, etc and be unable to keep the rent up. So should you buy when you have the chance and afford yourself some sort of security? Or risk being damned?

 

Where I live i.e. UK, if you’re renting a home…you’re actually buying some1 else’s property for them. So when you’re done paying for the whole house (20yrs or so)…and the house is theirs, they kick you out. So you technically paid for the whole house yet it isn’t yours! And you’re out on the street (prolly near retirement) and you’ve spent your entire life’s savings on some1 else’s property.

 

There is gotta be an alternative solution to renting. Besides, isn’t securing a roof over your head a necessity?

[Valenteenah.]

I believe Asian Muslims have their own system for buying properties - they all buy their properties pretty early on, which is great because having a secure home for your family is almost as important as putting food on the table (renting is a dodgy venture and hardly good value for your money). I think they use a network of family and friends who put up the total amount, the house is bought, and then the money paid back in bundles within the next 10 years...or something like that. Also parents put aside some money to help their kids get on the property ladder later on (another brilliant idea).

 

A good system I think, but it probably won't work for Somalis. Getting back a borrowed £20 is a hassle, let alone a borrowed £20,000.

 

But I guess it depends on the families...and the friends.

[Castro]

There is gotta be an alternative solution to renting. Besides, isn’t securing a roof over your head a necessity?

Why this is the sort of secular argument I would have made!

 

There are several alternatives to renting. One of them is finding a city (like Houston, TX) which has a fairly affordable housing prices and buy here. A one bedroom condo is anywhere from $40-70k. As a first home, and if one is not into keeping up with the Joneses one can save up and pay for the thing in cash. Not that disciplined? Buy a piece of land, it usually costs less if its way out in boonyville and build on it slowly. These alternatives may not be feasible depending on your city or country of residence and your income.

 

Zephyrine, you're right. I think it is more tempting to engage in interest-bearing transactions than the idea of lending money to maryooley (or anyone) to buy a house.

[-Serenity-]

All good suggestions but there are tens of ways to skin a cat. And not every1 has a choice.

 

Buying a property in London is like no other. I assure you.

[Khayr]

Salaams,

1)How are Masjids bought because people don't raise millions All at once and Banks/Creditors

unless you pay them ALL AT ONCE, usually charge

Interest on outstanding Principal?

 

2)How do Muslims buy Businesses when a business might cost a minimum of $100,000?

(Most souls won't loan you $100,000 and its a struggle and half trying to save $20 from one paycheque let alone $100,000)

 

3) If you have Bad Credit, you really can't RENT in most cases or get these 'HALAL MORTGAGES' that have Ridicilous Requirements. So What is the alternative for people with BAD CREDIT and MASSIVE STUDENT LOANS?

 

 

Fi Amanillah

[shyhem]

I guess the only alternative u guys have is build afew houses in Africa,somalia or kenya to be exact.It will cost you about $50000 to build a five bedroom house in Nairobi in a nice neighbourhood.You will buy the house from a real estate developer who is a somali.He will ask for about 20% in advance and u will pay the rest in however u want,no interest and no other charges.You can live in the house or rent it for about $500.In less than five yrs the house is yours plus y can sell it for almost double the price and the best part is u can use that money to buy a halal house in u'r host country........Think outside the box.

[Valenteenah.]

Originally posted by Khayr:

Salaams,

1)How are Masjids bought because people don't raise millions All at once and Banks/Creditors

unless you pay them ALL AT ONCE, usually charge

Interest on outstanding Principal?

 

2)How do Muslims buy Businesses when a business might cost a minimum of $100,000?

(Most souls won't loan you $100,000 and its a struggle and half trying to save $20 from one paycheque let alone $100,000)

 

3) If you have Bad Credit, you really can't RENT in most cases or get these 'HALAL MORTGAGES' that have Ridicilous Requirements. So What is the alternative for people with BAD CREDIT and MASSIVE STUDENT LOANS?

 

 

Fi Amanillah

What are you saying, Khayr?

[N.O.R.F]

^^wadanka ka-bax?

[Rahima]

If Muslims want to own property in the west, they will have to find other means then jeopardising their religion by falling victim to Riba.

 

There are ways around this, Allah has made this religion easy, it’s just sad that we make it difficult for ourselves. All it takes is for the wealthy Muslims to establish a loans institution which adheres to the Islamic regulations of borrowing (the rental system). If this is not available to any of us, then we must make a choice, our religion or owning property (which is just a worldly gain after all)!

 

As others have stated, if you can’t afford a house in your adopted country then perhaps Africa is an option worth looking at-beautiful house for a cheap price and no longer will you be held hostage by rent.

 

We have many options; taking Riba really has no excuse. Deep down inside we all know it, but it seems that many of the Muslims who have taken these riba-based loans are trying to deceive and perhaps convince themselves more than others.

[mz-alpha-soup]

I believe Asian Muslims have their own system for buying properties - they all buy their properties pretty early on, which is great because having a secure home for your family is almost as important as putting food on the table (renting is a dodgy venture and hardly good value for your money). I think they use a network of family and friends who put up the total amount, the house is bought, and then the money paid back in bundles within the next 10 years...or something like that.

Thnx Zephyrine for this insight, i never thought of this idea, its a great one.