Ownership of a home the halal way

[S.Ali786]

Salams brothers & sisters, as you know interest is haram/forbidden in Islam so the standard UK mortgage is haram i believe. Also, i have heard that Islamic mortgages which they are called or Sharia Compliant mortgages are actually not halal as you still pay more than borrowed. So what is the halal way of owning a house apart from paying cash in full or borrowing cash from friends/family to pay in full?

[Bhabha]

Apparently, you can't.... unless you have all of that random cash lying around, for which I believe a person who has the full cash lying around is probably and MOST LIKELY not earning it the halal way...

[Misbah0411]

Don't know of one.

[muslimah_B]

Salams brothers & sisters, as you know interest is haram/forbidden in Islam so the standard UK mortgage is haram i believe. Also, i have heard that Islamic mortgages which they are called or Sharia Compliant mortgages are actually not halal as you still pay more than borrowed. So what is the halal way of owning a house apart from paying cash in full or borrowing cash from friends/family to pay in full?

Asalam alaykum

There is a scheme called rent to buy that the government are doing, i havent checked it out properly yet but was interested, in sha Allah you could give that a look and see if its halal in sha Allah

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[ardianto]

Salams brothers & sisters, as you know interest is haram/forbidden in Islam so the standard UK mortgage is haram i believe. Also, i have heard that Islamic mortgages which they are called or Sharia Compliant mortgages are actually not halal as you still pay more than borrowed. So what is the halal way of owning a house apart from paying cash in full or borrowing cash from friends/family to pay in full?

Assalamualaikum.

Riba is impermissible, but trading which the seller take profit is permissible. And one kind of trading the permissible is murabahah, or first party buy the stuff that the second party want, then sell to the second party in the price that both parties agreed, and the second party pay it in fixed installment.

In example, you want to buy a car but you don't have money. The price is 11,000. Then you make agreement with me. I buy that car, then sell it again to you in price 12,000 which you can pay in fixed installment 1,000 per month for 12 months.

This is the system that used by sharia banks in Muslim majority countries for their customers who want to buy something, like house.

[MuslimInshallah]

Wa alaikum assalaam Ali,


It helps if you buy a simple home. And then expand if you want to/need to.

Also, a fixer-upper may not be pretty, but it will be cheaper. It may not earn you the envy of your friends and colleagues, but if you have a roof over your head, you can slowly renovate it.

(smile) These points may seem obvious, but I am struck how many people buy really gorgeous homes that they can't really afford.

You can also look at where you need to commute to, and see how you might be able to manage without a car (check this before you buy the home). Because cars are a large expense. Much larger than people are generally aware.

Try to see how you can reduce your expenses. I have found that homeschooling, eating home-cooked food and buying second hand are great ways to reduce expenses.

(smile) You may not be able to buy your dream home right away, but by being frugal (easier when you have a goal in mind, like purchasing a house) and minimizing your expectations, you can achieve this more easily.

And try and think outside of the box. Evaluate whether your work is worth it, or whether you might find a better paying job, or a job that requires less expenses (in time and money), or a job location that is less expensive. (smile) Sometimes, a job that seems less-well paid may make better economic sense, if it means you can live in a less-expensive area. I found a book called Your Money or Your Life, by Joe Dominguez and Vicki Robin had some useful insights and methods to help you curb your spending... without budgeting.

I hope this helps a little.


May Allah, the Almighty, Help us see how we can have better, richer, and more Islamic lives.

[Bhabha]

Assalamualaikum.

Riba is impermissible, but trading which the seller take profit is permissible. And one kind of trading the permissible is murabahah, or first party buy the stuff that the second party want, then sell to the second party in the price that both parties agreed, and the second party pay it in fixed installment.

In example, you want to buy a car but you don't have money. The price is 11,000. Then you make agreement with me. I buy that car, then sell it again to you in price 12,000 which you can pay in fixed installment 1,000 per month for 12 months.

This is the system that used by sharia banks in Muslim majority countries for their customers who want to buy something, like house.

Isn't that the same thing....? Is it not riba because we are not calling it riba, but instead it's called another name? The person is still paying more than what the original price of their home is...

For example in the case of a home that is 125,000 originally by your method, they would end up paying 136,000 and thus 11,320 just to borrow that money. It is still riba, just this time it's a smaller percentage. You are still paying back more than what was borrowed, in order to borrow the money that you did not have in the first place.

They may do this in Muslim countries, but riba is riba. regardless of the name that you call it. When a bank lends you money for a home, that home is not yours until it has been paid and as such the bank is technically selling you the home for a higher price in installments. :heated::heated:

[muslimah_B]

I think people are confusing what exactly interest is

Lets say i borrow £1000 and for borrowing it i have to pay back an extra £100 《《 this £100 is interest as im basically paying back more than i borrowed (not allowed)

In back accounts (well uk) when you have a savings account once you exceed a certain amount they put money into your account unwillingly (this money is interest and haram also) you have not worked for this money therefore have not earned it

Its very simple however much you borrow, you pay back that exact amount and it is halal
If you are having to pay more than what you borrowed then it is interest and therefore haram

[ardianto]

Isn't that the same thing....? Is it not riba because we are not calling it riba, but instead it's called another name? The person is still paying more than what the original price of their home is...

For example in the case of a home that is 125,000 originally by your method, they would end up paying 136,000 and thus 11,320 just to borrow that money. It is still riba, just this time it's a smaller percentage. You are still paying back more than what was borrowed, in order to borrow the money that you did not have in the first place.

They may do this in Muslim countries, but riba is riba. regardless of the name that you call it. When a bank lends you money for a home, that home is not yours until it has been paid and as such the bank is technically selling you the home for a higher price in installments. :heated::heated:

The controversial thing in murabahah like this is, the stuff bought by request from the party that want it. Different than if a seller buy the stuff to be sold in installment without any customer request it before. Indeed, some people classify murabahah like in my previous post as riba.