why is this so complicated? why cant we have simple structure. 1) bank buys the house. 2) sells it you with x amount of profit 3)you pay the bank in installments and the bank keeps the house as collateral till you complete your payment.
The issue comes down to the risk. If the bank buys the house, they need to take the risk alongside the profits. However, in Islamic mortgages, the bank requires the person to 1. Pay stamp duty, 2. Take out insurance, and 3. Pay for the maintenance. So they do not carry out any of the acts that a true owner does. An investment without any risk is the definition of interest, which is where the issue arises.
@@wordsmithsedit I agree, why would Allah care which way you bought the house? The bank finances it for you, they make their profit and thats OK with me. Its not the same as exploitive riba from the time of the prophet.
@@roberthannah7983 I understand your point that exploitation is the main reason behind riba being haram. But it’s not the only reason. The underlying reason is overarching justice and equality. The riba-based system is inherently unfair and has macro-effects on the way business is conducted (e.g., a lender being more averse to risk than an investor, etc.)
@@wordsmithsedit I think a lender should be risk averse if they want to - think of an elderly retiree with a modest investment and income who doesnt know much about finance. But another type of investor can take on lots of risk like a venture capital firm or a sophisticated entrepreneur - thats their job. The way it works out in modern finance is that an expected non-diversifiable equity risk premium is associated with the degree of risk associated with an investment (Bill Sharpe, Nobel prize, capital asset pricing model) - you earn added return for risk. For banks - there is a rather elaborate set of risk weighted capital allocation regulations banks have to follow - which didnt always work as we know! We dont want to ask banks to take on more risk - and they dont make good business partners in any case! There are lots of borrowers who are quite ok with fixed income loans - people with steady jobs, utilities and mature corporations with steady sales, and governments with tax revenue. Islamic scholars dont seem to contribute much to this discussion, except to issue the useful warning do not burden yourself with too much debt. If Islamic scholars are truly concerned about riba, they should promote truth in lending, consumer protection, and help control loan sharking and predatory lending.
Although I completely appreciate your video as more knowledge on Islamic mortgage is crucial for our community, I do think this format is doing a disservice to those who truly have skepticism on the matter. If you could bring someone in who is truly on the other side of the argument and debate them, that would be more beneficial as it removes room for prearranged questions and answers which in turn would push this whole debate forward. Nonetheless, good material keep it up 👍🏼
Could not agree more with this comment. I would really appreciate both opinions being cascaded by experts of finance and fiqh (whether the one individual or two per side). May i suggest Mufti Amjad Muhammed and or Mufti Abdur Rahman Mangera. Not sure of their opinion on this topic but are reputable scholars
I don't fully agree. Some of them you can't debate with. Although they hear, they don't listen. They only want cheap and don't care if its Halal or Haraam.
I'm personally not convinced on the Islamic mortgages. However, I want to note a (perhaps unintended?) slightly disparaging tone is detected in the overly pompous and self-righteous cousin, which I can assure you isn't the character of those who genuinely oppose these mortgages for legitimate reasons.
Great observation. I thought it was mainly for comedic effect so I enjoyed it but I'm with you that the whole video felt like an infomercial to justify the lack of substantive difference between an Islamic mortgage and a non Islamic one.
When you drill down into the rationale for prohibiting riba, the reasons scholars advance is that interest represents exploitation and unfairness. Consequently, an Islamic mortgage should be cheaper or more advantageous in some way. But it isn't, its more expensive than a conventional mortgage. The excuse provided is that the conventional industry is bigger and more efficient. That excuse rings hollow to someone trying to buy a home.
Still seems dodgy to me. I am looking at getting a house but I do not want any kind of mortgage. Al-Tabari reported: Abu Darda, may Allah be pleased with him, said, “Goodness is in peace of mind and evil is in doubt. Leave what makes you doubt for what does not make you doubt.” Source: Tafsīr al-Ṭabarī 67:15 I thought we were told to live like a traveller. Why do we need a house. I prefer to just buy a house with cash. May Allah strengthen us - Aameen.
You seem very naive. The whole point of islamic mortgages in the west is because hardly anyone can buy a house with cash. In pakistan you may be able to buy a house on cash but if you are a long term resident in the west then buying a house will later on become a necessity as your family grows as you would need a bigger house, more car spaces etc. Here where i live, $250,000 will only get you a shoebox.
@Matro25 muslim family members tend to live under one roof unlike the western people who when the teenager turns 18, they move out. So the mortgage facility can help solve this problem to acquire an adequate sized house
Jazakahallah for this Hadith very insightful to this. Its true, living like travellers will mean we won’t need to feel the urge to purchase. This world isn’t permanent
@@redman6790 so if everyone is thinking like that, there will not be any home at all. Will it be truly Islamic? Did the prophet and the righteous companions not have a house to live?
You give an analogy of fruit and beer, that pegging fruit to beer makes it comparable but not haram, what you miss though is far greater, how would you justify an increase in your mortgage repayment due to base rate increase? The fair way would be for both buyer and seller to agree on a price, and remain there on that price regardless of time, slice the cake whichever way you want...you have made an unspecified undetermined amount of money over time. That is riba.
Putting my islamic jurisprudence background to a side and wearing the laymen's cap, I do believe that it is relatively common sense to distinguish and grasp the permissibility of Islamic banking, based on the basic principles of musharakah, and the clear prohibition of conventional mortgage. However, this video has simplified the topic to a child level. May Allah grant everyone the true understanding of deen.
This is actually quite condescending to those who are sceptical, I didn't hear anything within this video that actually properly unpacks why these mortgages are halal
The biggest issue with Islamic mortgage ,is the loan value as to be min £150,000, that value is nothing for down south but a know personally a lot of people up north can't qualify due to loan amount and earning amounts that there have to resort to interest based
Let's be straight to the point and actually address the concern of this entire topic. First let's remove the concept of an Islamic bank in the west because they'll still be able to charge you interest and often times is more expensive than a conventional mortgage. Plus even a late payment when renting a home will cost you interest. Which was what was happening during the Prophet's time (PBUH), poor people were late on loan repayments and they were further burdened with interest which Allah condemned. So if someone is financially struggling, rent is unaffordable but a mortgage is. Would that not be the wiser option? Was interest not condemned by Allah because it made the lives of those who were trapped paying interest extremely difficult? Did Allah not condemn the one who "eats" interest in the Quran? While the Prophet (PBUH) cursed the one who pays interest and witnesses the contract alongside the one who charges it because they were all by association supporting the interest system? But does the same directly apply today where currency isn't gold and silver but a medium of exchange (paper money) that's easily manipulated in its value by the same people who push this interest system on everyone? Furthermore making a halal income in this world is already extremely difficult and near impossible when you want to make enough to entirely buy a house in modern times where the elite families controlling the fed reserves manipulate the housing market. The price of a home is more than 10x what it once was a few decades ago. This topic is a concern that needs the consensus of scholars that are well informed in a majority of topics applying to modern times, not just one who although intends well, speaks from a simple point of view of halal vs haram.
I don't see why "it's expensive" is even an argument. The issue is avoiding Riba, not cost. If you can't afford it then don't get one. You pay extra for halaal meat don't you? That being said, ehhhh I still don't know enough to decide. Kinda seems like it's it's just taking a traditional riba mortgage and calling it by a different name. But I also don't know what I'm talking about, a lot of this stuff is way above my level of understanding.
This has not quashed my doubts and I switched off after the cousin character started speaking, I felt the tone mockingly undermined the whole debate. Would love it if you brothers released a real deep dive video or podcast on this topic. You have amazing resources at disposal and your content is usually A+. So many of us are on the cusp of making our biggest financial move and step towards financial freedom, and the mortgage / home finance topic is huge and mis-understood. Many time I've had to drag myself back to islamic finance mindset after turning my back due to the frustration of misunderstanding key concepts / products, and not seeing a clear strategy for earning an income e.g. through BTL due to the margins being so small. If you could release a vid / podcast discussing actual strategies to build property portfolios, or even point us in the right direction, you'd provide so much peace and focus to many of us struggling on making that key decision(s) with confidence. Though there isn't any other option, I'd certainly be content knowing why its the right option. Sorry for the essay, and jazakaAllahu khairan. Shuhad
Amazing comments!!! Right to the point! I’m a Real Estate Investor myself and I want to grow wealth without having to compromise my faith! I think our best option would’ve been to seek advice from successful Muslims entrepreneurs already in the business!
About Professor Javed Ahmed Ghamidi, I not only believe that there is no scholar of his stature profundity of religious thought and precision of its understanding and lucidity of his articulation in the Muslim word, but I also believe that I have yet to see anybody more profound just and humane than Professor Javed Ahmed Ghamidi sahib, when it comes to commentary on social issues including human rights. May Allah bless his countless blessings upon Ghamdi sb! Ameeeeeen. ( USTAAD MOHTARAM MAY YOUR SEED PROSPER GOD WILLING) Listen to this Professor what is forbidden and what isn’t in mortgages.
Thank you for bringing this topic to the surface, Islamic mortgages/HPPs are fundamental. Of course, at the moment many banks across the board have withdrawn their 95% LTV which, if you were aiming for an Islamic HPP, has made it incredibly difficult to make any moves. Any predictions as to when these may return?
Can someone clarify below: 1. After buying a house if I need to move to another location and need to sell the house to buy in another location. How the Islamic mortgage can help when the property price drops during selling. Looks like I got stuck. 2. When the buyer looks after the property while staying in the house, does he get any additional benefits than a tenant? 3. Who pays for the upkeeping the house like painting exterior, repairs or replacing appliances etc. Normally the landlord bears these type of cost To my understanding, Islamic finance can be true Islamic if both parties work under the faith of Allah and with honesty. The Home buyer has to be honest and maintain the repair cost,, shares both profit and losses in a partnership basis but gets additional benefits for looking after the house (I mean little more than his financial contributions).
@@IFGuru ,el hamdullilah for all the muslim scholars and brothers and sisters who work in Islamic fields: daaua,finance,social work...jazakum allah khayran now about the Islamic finance i think we need to see more communications between all working in this field : exchange ideas ,learn from each other ,it seems like everybody got their own You tube channel,twitter account or website and has his followrs(aka mourideen-مريدين) and he is preaching his own views in Islamic finance and us as Muslim public are not sure who has the haq ,and i know in fiqh there are always different opinions but i really think it s beneficial for all of you brothers to communicate examine/criticize/inspect each other work ...i want to see in your show : brother Tarek el diwany ,Br Rakaan Keyali, Br Joe Bradford ....
Have you asked these senior scholars how much they are paid to sit on these boards and provide fatwas? Is there a conflict present that may result in stretching of acceptability? These questions are appropriate and any scholar worth 2 pence would be open to due this level of due diligence.
Well is there anyone else having issue with the phrase " Islamic mortgage" "Mortgage" is something as a concept "un-islamic" . It almost sounds like "halal beer" or something similar. If there is scope of Islamic home buying options without haram involved then give a different name. I am bothered by the name let alone the terms and all relevant questions.
Regarding the Hadith that prohibits two contracts in one, let's look at how Ibn Abbas and Ibn Mas'oud, as well as later scholars like Ibn Taymiyyah agreed on its explanation. Ibn Abbas clearly said that the explanation of the Hadith is offering a product for two prices: a cash price up front, or a delayed price (usually higher) for a delayed payment, and the increase in price (regardless of option) is Riba. The Hadith says nothing about ambiguity or leaving the option open in the contract. The very fact that someone is increasing the price of an item in exchange for a delay in payment is Riba. This is the conclusion that the companions Ibn Abbas and Ibn Mas'oud followed, and I'm not aware of any other companion that had a different view. The so called "Murabaha" contract where a bank buys a car or a house and sells it for an increase in price in exchange for deferring payment is Riba, and Allah knows best.
@@johncitizen5843 Islam does not deny the time value of money, but the Hadith is clear that raising the price in exchange for delay in payment is prohibited. Are you going to argue with the likes of Ibn Abbas and Ibn Mas'oud?
@@zhamed9587 according to my research, this is permissible as long as the buyer and seller have agreed upon it at the start. This is called a credit sale or murabaha. An asset is involved in this transaction.
@@johncitizen5843 It doesn't matter if an asset is involved in the transaction. Murabaha originally referred to what a trader does: buys one item for a given price and sells it for a higher price (e.g. buy wholesale for cheap and sell individual items for a higher price). There is nothing wrong with that. The "Islamic" banks came and took that term and applied to an almost surely Haram transaction whereby they increase the price of the item in exchange for postponing payment. Going back to my original comment, Ibn Abbas and Ibn Mas'oud prohibited this transaction, who are we to claim that this transaction is permissible? Ibn Abbas said this is a money for money transaction with an item in between (to mask the Riba involved). In an interest based mortgage, the buyer and seller (bank) agree on a price, does that make it Halal? Of course not. Agreeing on a price is not why it's Haram. Please watch this ruclips.net/video/ehbgkqZQ3Gk/видео.html
bro, i have a question.. why is it that the islamic banks not have their own development research team to identify potential properties worth of the banks investments? say the banks buy the properties from the developers, becomes their assets and resell at double the price with monthly payment schemes. 1. by doing so, wudnt the banks help to reduce speculation of properties? 2. isnt this much simpler and the whole process becomes entirely halal without much complications 3. banks can sell it at a rent to own basis. 4. banks too can benefit from the appreciation of the asset at least as paper profit until the ownership is transfered to the buyers who fully paid all rents to finally own it.
I’m still not convince that so called Islamic finance is fair and equitable, as you end up paying more than conventional bank and the so called rent is higher than market rate ! So I can’t see it’s different than Riba based on the unfair transaction thus Julum
Entertaining video. Analogies can be used to justify anything, but in my opinion this is a serious matter. Calling debt based products, equity like profit sharing is a big responsibility- In the two brother examples would it be fair when house prices go up, the bank (brother) does not share upside? To me and many other this is more analogous to contractum trinus- contracts devised by European bankers and merchants in the Middle Ages as a method of circumventing canonical laws prohibiting usury.
PS: I have yet to find any juice shop owner who benchmarks his/her prices to wine . If he does that, he not only goes out of business but people will most likely question his sanity !
@@arsalanmustafa1563 that's because there is no regulation that makes juice vendors compare their prices to wine, the same can't be said for mortgages.
Mohammed Miah - the reason it’s linked to libor is all banks trade money - both conventional and Islamic . This fundamental fact has not changed - there were money lender before the prophets time (same business model) and there are money lenders now . Banks can do whatever they want . People have an issue once it’s called “Islamic” - call if Usmani banking if they must, just don’t malign Islam Ps: if people receive any compensation from Islamic banks to promote their products this should also be disclosed openly - as transparency is also a fundamental requirement in IF
Arsalan Mustafa that’s a valid point but separate to what I’m making, his analogy is clearly limited but his point still stands in that specific case. You taking that analogy in a literal sense serves no purpose. I’m still very skeptical about their “Islamic banking” though.
Mohammed Miah I agree I used ridicule to make the point - I thought it was fair game given the video did the same I wish the best to the Islamic finance guru team
Quote from the Holy Quran, Al-Baqara 2:275 ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُ ۥ مَوْعِظَةٌ مِّن رَّبِّهِ ۦ فَٱنتَهَىٰ فَلَهُ ۥ مَا سَلَفَ وَأَمْرُهُ ۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Aslk i have a question and this question has not been answered for almost 5 years Lets say i buy a house for 500,000 out of which i took 50% islamic financing so basically my equity is 250k and bank share is 250k let say the rent on that is 3000 so i pay rent to the bank as 1500 After 1 year the value of house went down to like 300,000 and let's assume my equity in the house is now 60% and islamic bank is 40%. So as per current market value now the equity distribution is 180k for me and 120k for islamic bank Now the question is does with varying market condition does islamic bank equity also decreases or it says the same when the contract was signed. will they take there share of house value loss?
That’s absolutely fair point, if bank shares the loss in value then they will also demand the gain in house … I believe loss and profit on total value of the house should there but in reality if borrower staying in house it will be no loss over the total cycle of finance. But the clause of loss should be part of clause
Conventional Mortgage is just cheaper and if you calculate how much money you putting into this Islamic mortgage "Partnership agreement" vs Conventional Mortgage the amount is the same if not even higher with the first mortgage. The question isn't true that Islamic way suppose to give people better option in life? in this case it is not.
In quraan it says consuming intrest is haraam. Most muslims give intrest. As far on islamic mortgage it varies more around the base rate than a non islamic mortgage. There was a mortgage where you did not pay intrest, you only paid capital. But if you were to sell the house and you paid 50% upon the capital gains. The question is that is it haraam to pay intrest as in the quraan it says its haraam to consume intrest. As per islamic banking and islamic mortgage its just rewording and re packaging a normal mortgage and you end up paying more intrest overall.
The elephant in the rule was never discussed. Money is being used as a medium to make money. Rent is being used as a term in a structure to circumnavigate interest. Also, little was discussed on negative equity, you admitted that 2% rate could be obtained by depositors for lending their money for house buying. There's a lot of compelling issues which were not addressed in detail
Islamic is completely prohibited any profit. Then why do I have to pay a house that is worth 200k for 400k to Islamic bank. When I can pay my 200k house for small 2.7% extra and when I am able to pay fully I don’t have penalty. No you said yourself Islamic banks has to have more lee way to charge extra to the consumer. Then you are oppressing me as poor person.
Today me and bank buy a house for 1 million dollar(me 200k, bank 800k).. i gets 20% and bank gets 80% ownership.. tomorrow i said to the bank i dont want to rent or buy bank percentage rather i want bank to sold the house or my percentage to other buyer 3 years from now then i want 20% money of that transaction.. how about that 'islamic bank'
adding in arabic terms to make it sound Islamic lol. its just a bloody mortgage man, natwest give better deals. If you can't keep up payments.. you want the house back just like a standard mortgage. hypocrites
It's nice that you're trying to get this information out there, however with all due respect it was very biased and seemingly condescending, which is unbecoming if you truly do want to use your channel to provide a service to the community.
Just not convinced at all!!! Don’t see how a mortgage product from a conventional bank is different from an Islamic bank. If you simply replace the word interest with rent in conventional banking then it works exactly in a similar manner. There is no difference whatsoever.
I will only pay Islamic bank when they are giving me exactly 200k and extra. But if the Islamic bank extra is doubling up the price it is more haram than the bank who is taking only 2.5%. Fouling the price is haram dude it does not matter how you decorated with roses or tulips sorry I disagree
Why did Prophet Muhammad s.a.w abolished riba in madinah if he can establish 'islamic finance'.. you think islamic finance guru are more intelligent then our prophet
@@fs1383 absolutely nothing .... These brothers are telling and advising using Shia aqeeda..for which imam hanafi aqeeda rahkna walla ko illam hona chaya not to follow or you will miss guided. Nothing wrong with these brothers giving good and free advice...but I believe they are Shia followers. JazakAllah
The most disturbing problem of this video is that you claim the most common objection is regarding the higher rates of the islamic financing vs conventional mortgage. It should be obvious that the most common objection for those caring about halal/haram is the issue of when someone cannot make their payments and if they are subject to penalties, which if not handled differently leaves the same negative result the prophet (saw) warned about: the rich getting richer and the poor getting poorer. The fact that you didn't even deal with this question throughout the whole video is strange. It is not as if you do not know that is one of the top 2 complaints about the whole thing.
Why everyone debating this topic and the audience in videos are only men . Although there are dozens of women applying for mortgage. I think this again shows the situation of women is muslim societies.
why is this so complicated? why cant we have simple structure. 1) bank buys the house. 2) sells it you with x amount of profit 3)you pay the bank in installments and the bank keeps the house as collateral till you complete your payment.
What you said sounds great to me
The issue comes down to the risk. If the bank buys the house, they need to take the risk alongside the profits. However, in Islamic mortgages, the bank requires the person to 1. Pay stamp duty, 2. Take out insurance, and 3. Pay for the maintenance. So they do not carry out any of the acts that a true owner does. An investment without any risk is the definition of interest, which is where the issue arises.
@@wordsmithsedit I agree, why would Allah care which way you bought the house? The bank finances it for you, they make their profit and thats OK with me. Its not the same as exploitive riba from the time of the prophet.
@@roberthannah7983 I understand your point that exploitation is the main reason behind riba being haram. But it’s not the only reason. The underlying reason is overarching justice and equality. The riba-based system is inherently unfair and has macro-effects on the way business is conducted (e.g., a lender being more averse to risk than an investor, etc.)
@@wordsmithsedit I think a lender should be risk averse if they want to - think of an elderly retiree with a modest investment and income who doesnt know much about finance. But another type of investor can take on lots of risk like a venture capital firm or a sophisticated entrepreneur - thats their job. The way it works out in modern finance is that an expected non-diversifiable equity risk premium is associated with the degree of risk associated with an investment (Bill Sharpe, Nobel prize, capital asset pricing model) - you earn added return for risk. For banks - there is a rather elaborate set of risk weighted capital allocation regulations banks have to follow - which didnt always work as we know! We dont want to ask banks to take on more risk - and they dont make good business partners in any case!
There are lots of borrowers who are quite ok with fixed income loans - people with steady jobs, utilities and mature corporations with steady sales, and governments with tax revenue. Islamic scholars dont seem to contribute much to this discussion, except to issue the useful warning do not burden yourself with too much debt.
If Islamic scholars are truly concerned about riba, they should promote truth in lending, consumer protection, and help control loan sharking and predatory lending.
Although I completely appreciate your video as more knowledge on Islamic mortgage is crucial for our community, I do think this format is doing a disservice to those who truly have skepticism on the matter. If you could bring someone in who is truly on the other side of the argument and debate them, that would be more beneficial as it removes room for prearranged questions and answers which in turn would push this whole debate forward. Nonetheless, good material keep it up 👍🏼
Jzk khayr for feedback.
Could not agree more with this comment. I would really appreciate both opinions being cascaded by experts of finance and fiqh (whether the one individual or two per side). May i suggest Mufti Amjad Muhammed and or Mufti Abdur Rahman Mangera. Not sure of their opinion on this topic but are reputable scholars
Believe me brother Khalid these khinzeers are not going to invite the people of the wisdom
I don't fully agree. Some of them you can't debate with. Although they hear, they don't listen. They only want cheap and don't care if its Halal or Haraam.
I'm personally not convinced on the Islamic mortgages. However, I want to note a (perhaps unintended?) slightly disparaging tone is detected in the overly pompous and self-righteous cousin, which I can assure you isn't the character of those who genuinely oppose these mortgages for legitimate reasons.
Great observation. I thought it was mainly for comedic effect so I enjoyed it but I'm with you that the whole video felt like an infomercial to justify the lack of substantive difference between an Islamic mortgage and a non Islamic one.
Agree, nice to do the contrast, but the tone was slightly off, as it casts the disagreeing side as self righteous, even if unintentionally.
When you drill down into the rationale for prohibiting riba, the reasons scholars advance is that interest represents exploitation and unfairness. Consequently, an Islamic mortgage should be cheaper or more advantageous in some way. But it isn't, its more expensive than a conventional mortgage. The excuse provided is that the conventional industry is bigger and more efficient. That excuse rings hollow to someone trying to buy a home.
Still seems dodgy to me. I am looking at getting a house but I do not want any kind of mortgage.
Al-Tabari reported: Abu Darda, may Allah be pleased with him, said, “Goodness is in peace of mind and evil is in doubt. Leave what makes you doubt for what does not make you doubt.”
Source: Tafsīr al-Ṭabarī 67:15
I thought we were told to live like a traveller. Why do we need a house.
I prefer to just buy a house with cash.
May Allah strengthen us - Aameen.
Oh just buy with cash. Why didn't anyone else think of that 🤔🤣
You seem very naive. The whole point of islamic mortgages in the west is because hardly anyone can buy a house with cash. In pakistan you may be able to buy a house on cash but if you are a long term resident in the west then buying a house will later on become a necessity as your family grows as you would need a bigger house, more car spaces etc. Here where i live, $250,000 will only get you a shoebox.
@Matro25 muslim family members tend to live under one roof unlike the western people who when the teenager turns 18, they move out. So the mortgage facility can help solve this problem to acquire an adequate sized house
Jazakahallah for this Hadith very insightful to this. Its true, living like travellers will mean we won’t need to feel the urge to purchase. This world isn’t permanent
@@redman6790 so if everyone is thinking like that, there will not be any home at all. Will it be truly Islamic? Did the prophet and the righteous companions not have a house to live?
You give an analogy of fruit and beer, that pegging fruit to beer makes it comparable but not haram, what you miss though is far greater, how would you justify an increase in your mortgage repayment due to base rate increase? The fair way would be for both buyer and seller to agree on a price, and remain there on that price regardless of time, slice the cake whichever way you want...you have made an unspecified undetermined amount of money over time. That is riba.
Putting my islamic jurisprudence background to a side and wearing the laymen's cap, I do believe that it is relatively common sense to distinguish and grasp the permissibility of Islamic banking, based on the basic principles of musharakah, and the clear prohibition of conventional mortgage. However, this video has simplified the topic to a child level. May Allah grant everyone the true understanding of deen.
Gov? Is that you?
This is actually quite condescending to those who are sceptical, I didn't hear anything within this video that actually properly unpacks why these mortgages are halal
we need another video on this. I'm still confused.
Lol that's the issue with big corporate transactions like mortgages.
They use opaque clauses to razzle dazzle you out of your rights and money
The biggest issue with Islamic mortgage ,is the loan value as to be min £150,000, that value is nothing for down south but a know personally a lot of people up north can't qualify due to loan amount and earning amounts that there have to resort to interest based
Let's be straight to the point and actually address the concern of this entire topic. First let's remove the concept of an Islamic bank in the west because they'll still be able to charge you interest and often times is more expensive than a conventional mortgage. Plus even a late payment when renting a home will cost you interest. Which was what was happening during the Prophet's time (PBUH), poor people were late on loan repayments and they were further burdened with interest which Allah condemned.
So if someone is financially struggling, rent is unaffordable but a mortgage is. Would that not be the wiser option? Was interest not condemned by Allah because it made the lives of those who were trapped paying interest extremely difficult? Did Allah not condemn the one who "eats" interest in the Quran? While the Prophet (PBUH) cursed the one who pays interest and witnesses the contract alongside the one who charges it because they were all by association supporting the interest system? But does the same directly apply today where currency isn't gold and silver but a medium of exchange (paper money) that's easily manipulated in its value by the same people who push this interest system on everyone?
Furthermore making a halal income in this world is already extremely difficult and near impossible when you want to make enough to entirely buy a house in modern times where the elite families controlling the fed reserves manipulate the housing market. The price of a home is more than 10x what it once was a few decades ago. This topic is a concern that needs the consensus of scholars that are well informed in a majority of topics applying to modern times, not just one who although intends well, speaks from a simple point of view of halal vs haram.
I don't see why "it's expensive" is even an argument. The issue is avoiding Riba, not cost. If you can't afford it then don't get one. You pay extra for halaal meat don't you?
That being said, ehhhh I still don't know enough to decide. Kinda seems like it's it's just taking a traditional riba mortgage and calling it by a different name. But I also don't know what I'm talking about, a lot of this stuff is way above my level of understanding.
My friend got a cheaper quote from Al rayan compared to Natwest. Alhamdulillah.
I have been spending so much time to clarify this. Alhamdulilah to some extent you have convinced me.
Few questions: 1. Who are the 'Senior scholars'? 2. Who are the main 3 banks that provide Islamic mortgages?
This has not quashed my doubts and I switched off after the cousin character started speaking, I felt the tone mockingly undermined the whole debate.
Would love it if you brothers released a real deep dive video or podcast on this topic. You have amazing resources at disposal and your content is usually A+.
So many of us are on the cusp of making our biggest financial move and step towards financial freedom, and the mortgage / home finance topic is huge and mis-understood. Many time I've had to drag myself back to islamic finance mindset after turning my back due to the frustration of misunderstanding key concepts / products, and not seeing a clear strategy for earning an income e.g. through BTL due to the margins being so small.
If you could release a vid / podcast discussing actual strategies to build property portfolios, or even point us in the right direction, you'd provide so much peace and focus to many of us struggling on making that key decision(s) with confidence. Though there isn't any other option, I'd certainly be content knowing why its the right option.
Sorry for the essay, and jazakaAllahu khairan.
Shuhad
Amazing comments!!! Right to the point! I’m a Real Estate Investor myself and I want to grow wealth without having to compromise my faith! I think our best option would’ve been to seek advice from successful Muslims entrepreneurs already in the business!
All this 'Islamic mortgage' lingo is good and proper in theory, I have yet to see it in practice.
Totally agree with you they only share the profit but not the depreciation
About Professor Javed Ahmed Ghamidi, I not only believe that there is no scholar of his stature profundity of religious thought and precision of its understanding and lucidity of his articulation in the Muslim word, but I also believe that I have yet to see anybody more profound just and humane than Professor Javed Ahmed Ghamidi sahib, when it comes to commentary on social issues including human rights. May Allah bless his countless blessings upon Ghamdi sb! Ameeeeeen.
( USTAAD MOHTARAM MAY YOUR SEED PROSPER GOD WILLING)
Listen to this Professor what is forbidden and what isn’t in mortgages.
Thank you for bringing this topic to the surface, Islamic mortgages/HPPs are fundamental. Of course, at the moment many banks across the board have withdrawn their 95% LTV which, if you were aiming for an Islamic HPP, has made it incredibly difficult to make any moves. Any predictions as to when these may return?
Can someone clarify below:
1. After buying a house if I need to move to another location and need to sell the house to buy in another location. How the Islamic mortgage can help when the property price drops during selling. Looks like I got stuck.
2. When the buyer looks after the property while staying in the house, does he get any additional benefits than a tenant?
3. Who pays for the upkeeping the house like painting exterior, repairs or replacing appliances etc. Normally the landlord bears these type of cost
To my understanding, Islamic finance can be true Islamic if both parties work under the faith of Allah and with honesty. The Home buyer has to be honest and maintain the repair cost,, shares both profit and losses in a partnership basis but gets additional benefits for looking after the house (I mean little more than his financial contributions).
Selling a house with a market value 500k at 700k calling it profit is a joke.
You should have debated Br Safdar as opposing to these mortgages as halal
We have a lot of respect for him!
@@IFGuru ,el hamdullilah for all the muslim scholars and brothers and sisters who work in Islamic fields: daaua,finance,social work...jazakum allah khayran
now about the Islamic finance i think we need to see more communications between all working in this field : exchange ideas ,learn from each other ,it seems like everybody got their own You tube channel,twitter account or website and has his followrs(aka mourideen-مريدين) and he is preaching his own views in Islamic finance and us as Muslim public are not sure who has the haq ,and i know in fiqh there are always different opinions but i really think it s beneficial for all of you brothers to communicate examine/criticize/inspect each other work ...i want to see in your show : brother Tarek el diwany ,Br Rakaan Keyali, Br Joe Bradford ....
Who is br safdar? Can i get a pointer to any of his videos/papers?
Need to see more of Jacob Rees Khan
What a great name. Cousin Maj is bare jealous.
@@IFGuru i only noticed half way through that cousin waj is actually ibrahim!!
Have you asked these senior scholars how much they are paid to sit on these boards and provide fatwas? Is there a conflict present that may result in stretching of acceptability? These questions are appropriate and any scholar worth 2 pence would be open to due this level of due diligence.
Well is there anyone else having issue with the phrase " Islamic mortgage"
"Mortgage" is something as a concept "un-islamic" . It almost sounds like "halal beer" or something similar.
If there is scope of Islamic home buying options without haram involved then give a different name. I am bothered by the name let alone the terms and all relevant questions.
Yeah nomenclature is very important, we aren’t adopting a Western concept of home-buying and Islamifying it, we are establishing Shari’a
Salam. If we have bought a house on conventional mortgage, can we remorgage/refinance with islamic bank when the fixed rate duration ends?
Regarding the Hadith that prohibits two contracts in one, let's look at how Ibn Abbas and Ibn Mas'oud, as well as later scholars like Ibn Taymiyyah agreed on its explanation. Ibn Abbas clearly said that the explanation of the Hadith is offering a product for two prices: a cash price up front, or a delayed price (usually higher) for a delayed payment, and the increase in price (regardless of option) is Riba. The Hadith says nothing about ambiguity or leaving the option open in the contract. The very fact that someone is increasing the price of an item in exchange for a delay in payment is Riba. This is the conclusion that the companions Ibn Abbas and Ibn Mas'oud followed, and I'm not aware of any other companion that had a different view. The so called "Murabaha" contract where a bank buys a car or a house and sells it for an increase in price in exchange for deferring payment is Riba, and Allah knows best.
Allāhumma Bārik Akhī.
No it is not. The time value of money exists in islam.
@@johncitizen5843 Islam does not deny the time value of money, but the Hadith is clear that raising the price in exchange for delay in payment is prohibited. Are you going to argue with the likes of Ibn Abbas and Ibn Mas'oud?
@@zhamed9587 according to my research, this is permissible as long as the buyer and seller have agreed upon it at the start. This is called a credit sale or murabaha. An asset is involved in this transaction.
@@johncitizen5843 It doesn't matter if an asset is involved in the transaction. Murabaha originally referred to what a trader does: buys one item for a given price and sells it for a higher price (e.g. buy wholesale for cheap and sell individual items for a higher price). There is nothing wrong with that. The "Islamic" banks came and took that term and applied to an almost surely Haram transaction whereby they increase the price of the item in exchange for postponing payment. Going back to my original comment, Ibn Abbas and Ibn Mas'oud prohibited this transaction, who are we to claim that this transaction is permissible? Ibn Abbas said this is a money for money transaction with an item in between (to mask the Riba involved). In an interest based mortgage, the buyer and seller (bank) agree on a price, does that make it Halal? Of course not. Agreeing on a price is not why it's Haram. Please watch this ruclips.net/video/ehbgkqZQ3Gk/видео.html
What is the difference between borrowing from the banks and paying interest to the owners of the savings accounts same interest still haram.
bro, i have a question.. why is it that the islamic banks not have their own development research team to identify potential properties worth of the banks investments? say the banks buy the properties from the developers, becomes their assets and resell at double the price with monthly payment schemes.
1. by doing so, wudnt the banks help to reduce speculation of properties?
2. isnt this much simpler and the whole process becomes entirely halal without much complications
3. banks can sell it at a rent to own basis.
4. banks too can benefit from the appreciation of the asset at least as paper profit until the ownership is transfered to the buyers who fully paid all rents to finally own it.
I’m still not convince that so called Islamic finance is fair and equitable, as you end up paying more than conventional bank and the so called rent is higher than market rate ! So I can’t see it’s different than Riba based on the unfair transaction thus Julum
Entertaining video. Analogies can be used to justify anything, but in my opinion this is a serious matter. Calling debt based products, equity like profit sharing is a big responsibility- In the two brother examples would it be fair when house prices go up, the bank (brother) does not share upside?
To me and many other this is more analogous to contractum trinus- contracts devised by European bankers and merchants in the Middle Ages as a method of circumventing canonical laws prohibiting usury.
PS: I have yet to find any juice shop owner who benchmarks his/her prices to wine . If he does that, he not only goes out of business but people will most likely question his sanity !
@@arsalanmustafa1563 that's because there is no regulation that makes juice vendors compare their prices to wine, the same can't be said for mortgages.
Mohammed Miah - the reason it’s linked to libor is all banks trade money - both conventional and Islamic . This fundamental fact has not changed - there were money lender before the prophets time (same business model) and there are money lenders now .
Banks can do whatever they want . People have an issue once it’s called “Islamic” - call if Usmani banking if they must, just don’t malign Islam
Ps: if people receive any compensation from Islamic banks to promote their products this should also be disclosed openly - as transparency is also a fundamental requirement in IF
Arsalan Mustafa that’s a valid point but separate to what I’m making, his analogy is clearly limited but his point still stands in that specific case. You taking that analogy in a literal sense serves no purpose. I’m still very skeptical about their “Islamic banking” though.
Mohammed Miah I agree I used ridicule to make the point - I thought it was fair game given the video did the same
I wish the best to the Islamic finance guru team
Quote from the Holy Quran, Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُ ۥ مَوْعِظَةٌ مِّن رَّبِّهِ ۦ فَٱنتَهَىٰ فَلَهُ ۥ مَا سَلَفَ وَأَمْرُهُ ۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
can you give me the names of these senior scholars?
Aslk
i have a question and this question has not been answered for almost 5 years
Lets say i buy a house for 500,000 out of which i took 50% islamic financing so basically my equity is 250k and bank share is 250k
let say the rent on that is 3000 so i pay rent to the bank as 1500
After 1 year the value of house went down to like 300,000 and let's assume my equity in the house is now 60% and islamic bank is 40%. So as per current market value now the equity distribution is 180k for me and 120k for islamic bank
Now the question is does with varying market condition does islamic bank equity also decreases or it says the same when the contract was signed.
will they take there share of house value loss?
That’s absolutely fair point, if bank shares the loss in value then they will also demand the gain in house … I believe loss and profit on total value of the house should there but in reality if borrower staying in house it will be no loss over the total cycle of finance. But the clause of loss should be part of clause
Conventional Mortgage is just cheaper and if you calculate how much money you putting into this Islamic mortgage "Partnership agreement" vs Conventional Mortgage the amount is the same if not even higher with the first mortgage. The question isn't true that Islamic way suppose to give people better option in life? in this case it is not.
The way are different but the effects are the same.. so why Allah prohibited riba if 'the way' can be halal even though its still oppressed the poor
In quraan it says consuming intrest is haraam. Most muslims give intrest.
As far on islamic mortgage it varies more around the base rate than a non islamic mortgage.
There was a mortgage where you did not pay intrest, you only paid capital. But if you were to sell the house and you paid 50% upon the capital gains.
The question is that is it haraam to pay intrest as in the quraan it says its haraam to consume intrest.
As per islamic banking and islamic mortgage its just rewording and re packaging a normal mortgage and you end up paying more intrest overall.
Mortgage Finance in not home loan. My article for Financial Daily. InshAllah it will give a clear picture.
Where the money comes from for the Islamic mortgage
Pfida is ethical Islamic finance for home buying based in uk could you.please review
So it’s halal or haram???
The elephant in the rule was never discussed.
Money is being used as a medium to make money. Rent is being used as a term in a structure to circumnavigate interest.
Also, little was discussed on negative equity, you admitted that 2% rate could be obtained by depositors for lending their money for house buying.
There's a lot of compelling issues which were not addressed in detail
This is a bit wimpy, was expecting a proper debate
14:24 I like how he pronounced "gharar" in a posh Englishman accent 😁
Well said Ibra!
Islamic is completely prohibited any profit. Then why do I have to pay a house that is worth 200k for 400k to Islamic bank. When I can pay my 200k house for small 2.7% extra and when I am able to pay fully I don’t have penalty. No you said yourself Islamic banks has to have more lee way to charge extra to the consumer. Then you are oppressing me as poor person.
Today me and bank buy a house for 1 million dollar(me 200k, bank 800k).. i gets 20% and bank gets 80% ownership.. tomorrow i said to the bank i dont want to rent or buy bank percentage rather i want bank to sold the house or my percentage to other buyer 3 years from now then i want 20% money of that transaction.. how about that 'islamic bank'
adding in arabic terms to make it sound Islamic lol. its just a bloody mortgage man, natwest give better deals. If you can't keep up payments.. you want the house back just like a standard mortgage. hypocrites
this is full of property jargon
8:20 giant facepalm.
Nonetheless I love Maj's Jacob Rees Morgan's impression lol
The lease and th rent which is doubling up the price!! Haram
Does they give in Sweden?
It's nice that you're trying to get this information out there, however with all due respect it was very biased and seemingly condescending, which is unbecoming if you truly do want to use your channel to provide a service to the community.
sms54 don’t be so sensitive
Nabeel, great approach to have when dealing with intricate and complex issues that impact people directly
There's a book I'd like to bring to the 'skeptics' (on this issue) attention مروجة اسلامى بينكارى, it's in Urdu.
Slightly random question but what camera do you use?
Lol
Just not convinced at all!!! Don’t see how a mortgage product from a conventional bank is different from an Islamic bank. If you simply replace the word interest with rent in conventional banking then it works exactly in a similar manner. There is no difference whatsoever.
You are right. Subhanallah
Does anybody know solicitors with expertise in Islamic conveyancing
My friend recently got a cheaper Islamic home purchase plan than a conventional mortgage. He has accepted the offer.
How??
I will only pay Islamic bank when they are giving me exactly 200k and extra. But if the Islamic bank extra is doubling up the price it is more haram than the bank who is taking only 2.5%. Fouling the price is haram dude it does not matter how you decorated with roses or tulips sorry I disagree
Why did Prophet Muhammad s.a.w abolished riba in madinah if he can establish 'islamic finance'.. you think islamic finance guru are more intelligent then our prophet
learned a lot thank you
Lost me at 'afterall I shop at Waitrose'.
Beware hanafi brother's followers... brothers you need to confirm from theses brothers which imam they are following...
What’s wrong with hanafis?
@@fs1383 absolutely nothing ....
These brothers are telling and advising using Shia aqeeda..for which imam hanafi aqeeda rahkna walla ko illam hona chaya not to follow or you will miss guided. Nothing wrong with these brothers giving good and free advice...but I believe they are Shia followers. JazakAllah
Do you get sponsorship from Microsoft for carrying round the Surface lol.
Interest is forbidden not mortgages these people are misleading people
And you pay interest on the mortgage loan. This would make it haram
The most disturbing problem of this video is that you claim the most common objection is regarding the higher rates of the islamic financing vs conventional mortgage. It should be obvious that the most common objection for those caring about halal/haram is the issue of when someone cannot make their payments and if they are subject to penalties, which if not handled differently leaves the same negative result the prophet (saw) warned about: the rich getting richer and the poor getting poorer. The fact that you didn't even deal with this question throughout the whole video is strange. It is not as if you do not know that is one of the top 2 complaints about the whole thing.
Why everyone debating this topic and the audience in videos are only men .
Although there are dozens of women applying for mortgage.
I think this again shows the situation of women is muslim societies.
KhinzeeroN where you are sourcing the dollars?????
From where you bring the concept of banking in Islam?????
Not perfect but perfectly permissible? What are you talking about?
i liked this video, keep going
They're the same person!
As they are the same person so same is Islamic and conventional mortgage 😊
Woaalaikumussalam
Wow so you make your own rules and not the Quran rule. We’ll convention mortgage is cheaper for me
my god you guys the role play .... can we just stop it
Maj is corny.