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In the Name of God بسم الله

Explanation Of Ruling - Mortgage

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(bismillah)

 

(salam)

 

 

Question: Banks in the West give loans —known as mortgage— to those who do not have enough money to buy houses; this is to be paid back in [weekly or monthly] installments with a high rate of interest. Is a Muslim allowed to use this facility? If it is not permissible, is there a solution in your view for someone who claims that he needs the mortgage to buy his own residential house and does not possess enough money to pay for it?

 

Answer: It is permissible to take the money from the bank that is financed by non-Muslim government or private funds but not with the intention of loan. The knowledge that the bank will sooner or later force him to pay the capital as well as the interest does not affect [the lawfulness of] his taking the money.
 
 
I don't quite understand how to go about this, what intention should one have when taking money from the bank?
 
Thanks.
 
(wasalam)
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Yeah. These rules have never made sense to me either. How can you know you will pay with interest or have your transaction foreclosed, yet claim that your intention was not to pay interest? The bank will never "force" you to pay. They will cancel the transaction and take the property that you defaulted on. I simply can't get my mind around the unusual reasoning.

But in short, mortgages are permitted if it is the only way to buy property. As I understand it, student loans are also permitted if they are the only way to attain an education. Islam is meant to make our lives better, not worse.

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It is permissible to deposit [money] in non-Muslim (private or state-owned) banks. If a Muslim intends to get a loan from such banks, it is necessary that he should do so with the intention that it is a transaction without return, even if he knows that he will end up paying the capital as well as the interest. And he should not do so with the intention of getting the loan with the condition of [paying] interest.

 

SIstani, A Code of Practice for Muslims in the West

 

http://www.sistani.org/english/book/46/2053/

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The key thing is that the payment of interest is forbidden.

 

The bank will force you to repay the loan with interest, not on gunpoint, but by the fact that they will cause you harm by taking legal action against you or taking your mortgaged property, and you will forced to make the repayments in order to avoid such harm.

 

There is an intention that is involved in the forming of a contract, and that is the intention involved.

 

When agreeing with a lender on a mortgage or any interest-based loan, you will intend that you are taking the money from the bank, without the intention that you will repay it with interest.

It is possible that a person can get away with not paying the interest, e.g. if the bank collapses, or his records change or disappear at the bank, or he leaves the country, or he dies and the bank cannot touch his estate, or he declares bankruptcy, etc.

 

Therefore, one should have the intention that he has not agreed to repay the interest, except for the fact that he will be forced to do so. Thus, the payment of interest, which is forbidden, will not be with intention and will be solely to save himself from harm, and will therefore become permissible.

 

If you agreeable and willing in your mind to pay interest, and you pay it on this basis, then you are committing a sin.

Edited by abduljabbar
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Please explain where is the deception.

It seems frustratingly obvious to me. You know the legally binding contract that you are signing includes you agreeing to repay the loan with interest. How can you claim that you do not intend to keep your agreement at the same time as you are agreeing to it? You are either lying to the other party of the contract and therefore committing fraud (obtaining money under false pretenses,) or you are lying to yourself. Either way, it doesn't make sense to me. Perhaps someone can explain in a clear way how this isn't either fraud or delusion?

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Salam Alaikum

 

An agreement to take an interest-based loan is not recognized by the Sharia.

 

Simply put, if you cannot fathom the concept of entering into an "agreement" but having other intentions, then taking such loans is forbidden.

 

For Muslims, the Sharia is always first.

Edited by Abbas
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Great Question & Topic (y) .......... get's you thinking and digging deeper. 

 

Ideally, the concept of Interest is a Jewish Tradition (very rightly proved and accepted worldwide). A great number of us live in Countries which does not understand / incorporate the Shariah System, leaving us / them with no other option but to live under the law of the land. Naturally, with an already established Banking System, one has NO CHOICE but to accept the norms which are set....

 

The ruling above states that your NIYYAT at the time of taking the loan should not be that to pay interest, but that TO PURCHASE LAND OR A HOUSE FOR  MYSELF AND MY FAMILY QURBATAN ILLALAH. 

 

What ensues thereafter is between yourself and Allah (SWT). 

 

Remember, everywhere in the World there is a System of Asset Appreciation, so this can also pass off an as investment in a Business which will fetch you a Profit after your mortgage term is complete. 

 

I am sure there is Pardon :) 

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Yes I think that's right xstatik2 and I've always understood the ruling to mean that your intention is not to pay interest on 'x' but that you are agreeing to pay the bank no more than 'y' by instalments over 'z' number of years for the right to own your property outright. I agree, though, it  is a difficult ruling to interpret

Edited by shamoun
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basically - this means considering the cost of the property as inclusive of interest - so if you buy a two bedroom barely remodeled house in a gentrified hipster techie neighborhood/city for, say U.S. $30,00,000 - and the interest comes to, say 10,00,000 - you should consider your cost of property as  40,00,000 - four million. 

 

OTOH you can always just rent, open your own small business, and take the tax deductions that way... it is  not like families stay in the same home for generations in the "west" - barely even a decade if that... 

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40,000,000 house? Who would need or even want that? I understand prices are higher in certain areas, but what is that - Manhattan?

 

I think he's counting in lakhs and crores. Basically the number of zeros they have is correct, but the commas are in the wrong place. So he actually wrote 400,000 and not 40 million.

 

Look here for a translation:

 

http://en.wikipedia.org/wiki/Indian_Numbering_System

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