Q: Our locally accepted Mufti Sahib has developed a plan with a community bank that offers ‘Shariah Compliant’ home financing. The structure is as follows:
1.) The Muslim buyer would select the property and the bank would purchase it with a contact for immediate resale to the Muslim Purchaser for a fixed amount that would include the bank’s profit.
2.) The Muslim buyer would be given a fixed price and will not vary with interest rates.
3.) The Muslim buyer will have to sign a contract to buy the house from the bank before the bank purchases the property from the original seller.
4.) The bank states that they will take a loan on which they pay interest from a secondary source to finance such a purchase.
Based on these terms do you believe it is no longer a Riba contract?
And Allah Ta’ala (الله تعالى) knows best.
Mufti Zakaria Makada
Checked & Approved:
Mufti Ebrahim Salejee (Isipingo Beach)