i wanted to know that does a halal mortage exist. because i think that if u get a motrgage halal or not you still have to pay suud(intrest) so what makes the halal mortgage halal.
In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatuh
A mortgage contract works as follows;
For example, a person wishes to purchase a property and does not have the sufficient funds to do so. He then takes a loan from a bank to purchase the property. The bank will provide the person with the funds needed in the form a loan. The person then purchases the property through the bank and the bank then puts the property [or any other valuables of the borrower] under what is called “a mortgage” whereby if the person fails to repay the borrowered loan the bank will cease the property from the borrower and resell it to recover the money that was loaned. In such a transaction the bank charges interest on the installments of the loan they provide [to purchase the property] which makes this transaction impermissible.
As muslims we should adopt permissible methods in purchasing properties and homes etc. instead of entering in interest bearing transitions as above.
As an alternative, the following procedure should be adopted;
Firstly, the person will request the bank to purchase the intended property. After the bank agrees and purchases the property the bank will then add a profit to their total cost paid in purchasing the property and thereafter resell it to the intended buyer [borrower] at the price they agreed on. The bank will then reclaim the total amount of money from the purchaser of the property [borrower] in installments at a fix rate. The buyer will thereafter have full possession of the property.
Secondly, the buyer [borrower] will be asked to deposit the “Deed of the Property” to the bank [until he completes the total payment to the bank] so that, if perchance the borrower fails to repay back the bank, the bank will then resell the property and recover the loan.
In such a case, the bank will resell the entire property and repay the borrower for whatever fees he previously paid to the bank or the bank will resell only that portion of the property which was not paid for by the borrower. (Contemporary Fatawa Pg.290, Idara-e-Islamiat)
And Allah knows best
Ml. Safraz Mohammed,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In’aamiyyah