Question about mortgage and loan

[Abdulah97]

Assalamu alaikum,

Having a bunch of questions below, if you can please answer them as you go down would be great thanks!

My father has enough money to buy land and because finding houses/apartments is impossible right now so land is the next best thing.

This is going to take a big amount of money, unfortunately my father has enough cash to cover the land and then some, but to fully build a house on top of the land he would need a mortgage and possibly a loan down the line.

I do understand riba is haram, not just for the person gaining but also the person paying interest, goes both ways.

1. I was listening to a friend who says that apparently a shiekh was saying that mortgage is okay because you need to think of it like the bank is buying the house, say house price is half a mill, when you get a mortgage think of the bank now owns the home and is selling it to you for 1 million instead of half a million and so instead of thinking like you are paying interest think of it like you are paying for an overpriced home, what you think about this? So then it doesn't become a question about paying interest but becomes a question of buying an overpriced home?

2. Side question is in regards to someone who does not have a house in their name? I remember seeing somewhere that it is perhaps permissible to take out a mortgage if you don't have a house, is this true? Side question here is if someone gets a house with a mortgage and interest but lives inside the house is still not allowed?

3. Now even if the first question is true, my family is currently living with my grandfather, so we are not technically in a dire need for a home but at the same time, technically we don't have a home in our name, so would this constitute as a "need" ? We do pay rent but I am pretty sure its much smaller than what we would need to pay for a mortgage.

4. How do you counter argument that says "Keep paying rent for 30 years or get a mortgage" ?

5. Final question is in regards to Islamic Banks that give "Islamic loans" or "Islamic mortgages" are those truly shariah compliant and Islamic?

Please give me sources as well.


Jazakallahkhair

 

[فصيح الياسين]

Walaikumasalam dear brother. We advise you to contact the imam or aak online fatwa from any islamic university to help you and to solve your problem.

Your friend mislead you. No such a sheikh aprroves mortage. Yes there is disagreement between scholars that it is permissable mortages and interest etc when you are dealing with kafirs of non muslim countries or you are living in non muslim countries i.e darul harb. But this disagreement is in between ahnaf only

No such thing exist. Or may be you got misconceptions.

So your status also shows that you are not in such dire situation that haram can be halal for you.

Haram cannot be compared to halal.
So tackling down the 30 years loan need the elder advise. That is what to do or should we take a small sum of loan from different muslim brothers to build 1st story of the house etc etc

There is such Islamic mortage. there are three types: Ijara (lease), Musharaka (partnership) and Murabaha (profit).. yes it is shairah compliant. BUT WITH THE CONDITION THAT ON FAILING TO COMPLETE THE INSTALLMENT THERE IS NO FINE. IF YOU ARE FAILED TO FULFILL THE INSTALLMENT AND IS CHARGED WITH FINE THEN IT TURNS AGAIN INTO RIBA..

 

[Abdulah97]

Jazakallahkhair

 

[*charisma*]

1. I was listening to a friend who says that apparently a shiekh was saying that mortgage is okay because you need to think of it like the bank is buying the house, say house price is half a mill, when you get a mortgage think of the bank now owns the home and is selling it to you for 1 million instead of half a million and so instead of thinking like you are paying interest think of it like you are paying for an overpriced home, what you think about this? So then it doesn't become a question about paying interest but becomes a question of buying an overpriced home?

As long as interest is involved, it is never halal.

2. Side question is in regards to someone who does not have a house in their name? I remember seeing somewhere that it is perhaps permissible to take out a mortgage if you don't have a house, is this true? Side question here is if someone gets a house with a mortgage and interest but lives inside the house is still not allowed?

If you can't afford your own house, then you can't afford your own house. It is not an excuse to take out a mortgage with interest. Not being able to afford a house is the exact reason why you'd be perfect bait for banks to exploit you and your situation. It will put you in a worse position. The prophet pbuh said that involving yourself in riba is worse than committing the worst type of zina, so please take this manner just as seriously as you would to avoid zina.

5. Final question is in regards to Islamic Banks that give "Islamic loans" or "Islamic mortgages" are those truly shariah compliant and Islamic?

There are different types of islamic mortgages. Musharika for example is where you and the bank are co-owners of the house. You are essentially buying your other half from the bank, so as you make monthly payments, your share of the house grows while their share becomes less. Another type is called ijara which is basically a "rent-to-own" method. The bank fully owns the house initially and your payments are basically renting the house from them AND making payments to own it. Neither of these involve interest.

 

[Abdulah97]

There are different types of islamic mortgages. Musharika for example is where you and the bank are co-owners of the house. You are essentially buying your other half from the bank, so as you make monthly payments, your share of the house grows while their share becomes less. Another type is called ijara which is basically a "rent-to-own" method. The bank fully owns the house initially and your payments are basically renting the house from them AND making payments to own it. Neither of these involve interest.

Brother thank you for this, so my question for the co-owners and the rent-to-own are those only given by islamic banks does non islamic banks offer this?

 

[*charisma*]

Brother thank you for this, so my question for the co-owners and the rent-to-own are those only given by islamic banks does non islamic banks offer this?

Yes, some nonIslamic banks do offer them. For example https://www.devonbank.com/murabaha/ is a Jewish-run bank based in Chicago. They are very few in the US, however. I believe they may be more common in the UK. If you're based in the US, try looking up some of the banks mentioned in this article: https://www.eurekahedge.com/NewsAnd...-Finance-Finally-Taking-Root-in-North-America

Another way you can own a house is if the house is being sold directly by the owner. A rent-to-own contract can be drafted with them. My uncle did this with his house. You have to put a down payment on the house though and have an agreed monthly payment over the course of 5 years or so until it is fully paid off.