Mufti Faraz Adam % COMPLETE £1,152 Screening for Halal Stocks Available … I agree that it is a bit off-putting for the uninitiated that the same wording is being used, but it is actually standard practice in legal contract writing to work off templates and past contracts. You mentioned Islamic motgages have their own problems, is interest one of them? Therefore, you’ll pay higher 1) bank charges and 2) solicitors’ fees for an Islamic mortgage…. Secondly, on your assertion that a home is not a necessity, I’ll ask you, do you have kids? Required fields are marked *. 2020. Your email address will not be published. Islamic finance… Murabaha Islamic mortgage Under a murabaha structure, the Islamic bank will purchase a property on your behalf, and then sell you the same property at a marked up price. But they don’t, becuase they have waivered their rights. Great to hear from you and get your feedback. Save my name, email, and website in this browser for the next time I comment. Islamic mortgages are currently the only genuine solution for Muslims in the UK. The Islamic bank will buy the property for £500,000 having pre-agreed with the customer that the customer will then buy the property from the Islamic bank at a pre-agreed price, on pre-agreed payment terms. 8:37. Some scholars love it, others froth at the mouth upon its mention and have to do wudu again. Fine. With my experience in conveyancing, dealing with Islamic mortgages can be difficult. See this guild here and I’ve written about what makes an Islamic mortgage … This argument is the weakest argument put forward by this camp. Hope that clarifies things! Save my name, email, and website in this browser for the next time I comment. It also means that when we use our bank accounts, debit cards, notes and coins, we’re all indirectly supporting the institution of riba, even though we may not realise it. www.islamicfinanceguru.com. It is a mixture of equity from their shareholders (in the case of Al Rayan this is their Qatari parent Masraf Al Rayan) and savings and deposits in their current and savings accounts. from a purely fiqhi perspective that above quote statement was correct – though of course there is a point where if you’re just facilitating haram (e.g. At Ijara Community Development Corp. in Ann Arbor, MI, we offer various Islamic financing alternatives for your needs. Is a mortgage haram? “They actually price up the Islamic mortgage using LIBOR. But now I think we’re overthinking things. Vertical: Trading & Investment. The whole point of this article was to get some common misconceptions out of the way so we can have a sensible, informed discussion. Same principle, someone else (bank) purchases a home for you which you have to repay back over time. Islamic banks are operating in a regulatory system that is designed for conventional banks. “even if they were borrowing on interest and then offering us a halal mortgage, that would be acceptable for us, though haram for them of course. He studied his undergraduate at the University of Manchester which included an Erasmus+ exchange programme at the University of Amsterdam. To me it looks exactly the same thing as a conventional mortgage, with twisted terminology. The overwhelming majority of our money is created this way and so to create more money we need to create more debt. All that costs money. Your email address will not be published. There are different types of Islamic mortgage products. 357. © Copyright Islamic Finance Guru. The overwhelming majority of our money is created this way and so to create more money we need to create more debt. But then just as equally if you sell the house for 650,000, you make a profit of £425,000, as partners they should have a claim on the profit. Furthermore, the argument from “necessity” goes too far I feel. Then you have the added problem that the current regulatory framework is entirely designed for an interest-based bank. Islamic Finance Guru is an excellent company that provides resources for those looking to invest in a line with their faith. For more details you can always have a look at their annual filings. If you’re paying interest, whether to an Islamic Bank or Western Bank, you’re part of the problem. Islamic finance contracts made between a UK Islamic bank and a UK customer are always made under English law or Scottish law respectively. But what many of us forget is that Islam didn’t forbid just individuals from dealing in riba, Islam forbade the entire institution of riba, from top to bottom. I am not convinced that Islamic banks do borrow on interest from conventional sources. Given the centuries of perfecting that have gone into the conventional mortgage contract, one can understand why Islamic bank lawyers borrow phraseology from them. Founded: 2019. Key thing is I also hold Islamic mortgages are acceptable, so, while I see having kids means you want a house more, I would just got for an Islamic mortgage as that is an option for me. In Part One I’ve tried to get preliminary confusions out of the way first. We consider multiple issues that come up, over a series of article on this blog, but ultimately our view is that islamic mortgages are Islamic. JazakAllah khayr for those observations Amer, you’re bang on. If you don’t use them, this usually means before anything has even happened: 1)   It’s going to take longer because of the extra work. So if a juice shop sets up across the street from a pub and decides to price all of its juices in line with the price of beer across the road, is that juice permissible to buy? In conventional bank, its called an interest that lender will earn, in Islamic bank its called a rent. Sorry, but I was not convinced. as someone who has no background in economics whatsoever, could you please perhaps publish a recommended reading list (or even links to lectures) that those of us who are not so business-literate, can access? If I were to say to you “drink a couple of glasses of wine mate, go on. It also means that when we use our bank accounts, debit cards, notes and coins, we’re all indirectly supporting the institution of riba, even though we may not realise it. However Islamic banks, with their asset-backed mortgages, are treated differently to conventional lenders with their debt mortgages. In this part I consider arguments put forward for Muslims to just take out conventional mortgages, and then turn to common problems people have with Islamic mortgages. This site uses Akismet to reduce spam. We do this for one reason: to make our community better-off. As all other banks use LIBOR and conventional interest rate terminology to explain their pricing, the regulatory authorities ask Islamic banks to do likewise. Similarly Islamic finance contracts within … Now more than 20,000 people read their financial advice every month. This same system led to the foreclosure of millions of homes, millions of unemployed, and tremendous suffering across the world in the past seven years – and we’re are all hard-wired into this system.” – Can you explain in more detail how exactly the riba institution caused these global suffering or any articles that address the impact of riba businesses on the economy/society? The most popular of which is the Diminishing Musharaka (partnership). Of course for something like this it is best to consult a scholar one trusts and who can assess one’s particular circumstances. I didn’t say the conventional mortgage as we know it today has been around for hundreds of years, and I am not sure exactly when one can say modern mortgages started.What I did say was that the industry has been around for centuries and has evolved systems and contracts and legislation to deal with things. You are comparing a multinational juggernaut that is the conventional mortgage industry, with a clientèle of around 60m in the UK, and a centuries long history, with an Islamic bank – a fledging company in a fledging industry, founded just about a decade ago, with a clientèle of about 2m. This however is an area for Islamic banks to look to develop, if only to impr. The UK government in particular has already publicly backed growth in this sector, introducing changes to Stamp Duty rules to facilitate the growth in the Islamic mortgage market and the promise of the issue of a UK sovereign Sukuk (bond). Required fields are marked *. An Islamic mortgage is one that’s compliant with Sharia law. Ibrahim holds a BA in Philosophy, Politics, and Economics from the University of Oxford, an Alimiyyah degree from the Al Salam Institute, and an MA in Islamic Finance. The only possible application of necessity that seems relevant today are those people who are on a budget and are struggling to get good rental accommodation for their family (perhaps they have someone elderly living with them and they need to have a properly warm, safe, house) on that budget, who can’t afford to buy a house outright, but who can get access to an affordable mortgage that they can pay every month. 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