Mortgages vs Renting - Muslims in the West.

Every young Muslim couple or even individual in the west will at some point reach the time when they have to move into their own property, away from their immediate family, but for Muslims in the west this is a difficult situation.

Option 1 - Buy a house/flat outright with cash.

Of course this option if available to anyone is the best, it is halal, no dispute on this matter at all. The flat/house you buy can vary depending on the money you have. If you have little money, then you cannot buy a nice house in a nice area, so you're stuck in a bad area with a small house in a bad condition. Often this requires many hundred's if not thousands of pounds over time to renovate and re-decorate.

So unless you have a lot of a money, ie. are very wealthy, this option is not an option. If you have the money, then it's a given you'd buy.

Option 2 - Rent a house/flat.

Renting a house/flat is a reasonable option, again this is entirely halal. You pay the landlord for living in their property and continue to do so whilst you keep the payments up. The type of property you live in is dependent on your salary, but in most cases the average person will have to rent a flat with 2 beds or a small house in decent area but not everything will be right.

The major advantage to renting is, a lot of the maintenance of the house is under the responsibility of the landlord. You can also move at short notice.

The disadvantages are numerous though. You can pay a lot of money every month and your stake in the house never increases. You can't decorate or renovate the house without authorisation and it's pointless to do so, because it's not your property and you can be asked to leave at short notice.

As a Muslim this option is acceptable, because it is halal. However you will never have a property which is your own if you continue to rent. Financially you are giving away a lot every month, the rewards for yoru efforts are little. For example, you could pay £500 every month for a small house in the UK for 4 years, you would have paid £24000 give or take for that period of time, in terms of ownership, you have nothing. That is why I personally would never rent. On top of the rent, you'll need to spend on utility bills, council tax etc, so you have even less money to work with. Renting is expensive, very very expensive.

Option 3 - Buy a house with a Sharia Compliant Mortage (open to debate).

I have studied Sharia Compliant Mortgages for a while and my opinion is that the concept in large is partially correct but it is not halal entirely. For those who don't know, it's basically a mortage where you pay a deposite of 20% towards the house, you then take a mortage of 80%, which is paid by the bank. So basically the ownership of the house is 80-20 in the banks favour.

Over the years through monthly payments, you pay off the borrowed amount plus an additional amount, which they label as rent. As you continue to pay your ownership increases and for example after 12 years of payment the ownership may well be 50-50.

The advantage to a a Sharia Compliant mortgage is that there is no interest as such. The argument by many is that, the rent the Islamic banks take for their portion is interest in guise. I won't discuss that, because I am not a scholar and I can only go by what I know.

Of course doing it this way, the property is yours and you are free to renovate, extend, re-decorate accordingly. You can build a home as your own basically.

The disadvantage to these mortages is the repayments, it's comfortably more expensive than a conventional high street mortage. For example, if you borrow £50k to pay over a 25 year period for a conventional mortage you would pay £210-£220 depending on the rate of interest. The same mortage amount over a 25 year period will cost £250-£260. In my opinion, this goes against everything Islam is about, anyone who comes to you to borrow money is doing so because of their struggles and you should be trying to make it as easy as possible for them to pay you back and also live comfortably. Charging substantially more is not making it easier.

If you dig in further, then late payments are punished, they are not delayed, which would be the Islamic thing to do. Sure if someone can't pay the mortage one month, you would excuse them and add the amount to the balance and extend the mortage period by one month? Yes people could keep delaying payments in that case, but that is when the bank and the customer can discuss a different approach and perhaps end their agreement if needs be. But punishing them for not being able to pay, what is Islamic about that? That is amongst the primary reasons why I dislike the term halal for these mortgages. I know about this punishment in terms of a fine/fee, because I called the IBB and queried them myself.

I also like many others have to question the fact that the "rent" is open to fluctuation like interest rates, so it can go up and can go down. So there is a risk involved and this goes against everything that is halal. You can start to see why people think of "Islamic Mortgages" charging interest but under the name "rent".

It is however in principal without any doubt , less haram as such, than conventional high street mortgages. So the decision is the person's.

Option 4 - Buy a house with a conventional interest mortgage.

Conventional mortgages are haraam, most of us are aware of this, some of us who aren't can enter these mortgages and discover later on and put ourselves in a situation where we have to review again.

As stated above, these mortgages are cheaper than "Shariah Compliant Mortgages" but because of the interest charged, they falled under Riba and so are Haraam. You can alter certain terms to try and pay it off much quicker.



Most people in the west take out this type of mortage to fund them for a house purchase. As Muslims, because of the cost of houses in the west now, a 3 bed semi detached house with a normal garden and drive (an average house) costs about £150k throughout the UK and up to tripple that in parts of London, we simply cannot afford to purchase this outright upfront. We have to either mortgage or rent. I myself would never rent because I could never design or work on a house in the way me and my wife would like. We can't knock out a chimney without the landlord's permission for example.

So that leaves us with renting, an Islamic mortgage initially may be affordable, but if you have kids, if you lose your job, if circumstances change, will be even more difficult to maintain than a normal mortage.

Some will say that we have to persevere and Allah will reward us for our patience. However people who say that need to grow a bran cell or two, Allah will only help you if you help yourself. If you don't make an effort to do something yourself, how do you think you'll ever achieve your goals in life. Some say, Allah may reward you for your patience with a better job, well Allah may reward us with a better job, he may not as well, so you plan according to the current situation and the forseeable future realistically surely?

These are some of the findings I have found. Hope I have bored you with this, hopefully I haven't given a one sided view either way.