Islamic banking or mortgage

[Abdisamad]

Hello guys,

How do sharia compliant lenders make money or profit from lending money to customers for example a house loan? It's all so confusing, I did some research but I still don't fully understand.. Another issue if you as Muslim don't have any sharia compliant banks in the country you currently live is it permissible to take a loan from a conventional financial institution? I also researched this but it seems there are different opinions on it... Share your input, thank you.

 

[The Oponian Guild]

From what I’ve been told they just add up the interest that would be accrued from the loan in a normal bank, and then add it to the loan. And like any other bank, your deposit/savings will be used to fund the banks operation/investments.

 

[The Oponian Guild]

As for the permissibility of taking a normal loan with interest, that’s Haram, whether in a non Muslim country or not. Ik it leaves a lot of people in a pickle, but on the other hand very few can afford an Islamic banks loan.

 

[Abdisamad]

As for the permissibility of taking a normal loan with interest, that’s Haram, whether in a non Muslim country or not. Ik it leaves a lot of people in a pickle, but on the other hand very few can afford an Islamic banks loan.

But if we as Muslims cannot buy a house wouldn't that put us in a disadvantage compared to the rest of the society? So I understand the Islamic bank do have a profit margin for lending the customers money to buy a house or an apartment..

 

[Gacmeey]

But if we as Muslims cannot buy a house wouldn't that put us in a disadvantage compared to the rest of the society? So I understand the Islamic bank do have a profit margin for lending the customers money to buy a house or an apartment..

Yes and it’s not a problem that the final value coincides with average interest rates because the final value of the contract doesn’t change. If you agree on $1 million today in 30 years the loan value will still be $1 million

 

[Abdisamad]

From what I’ve been told they just add up the interest that would be accrued from the loan in a normal bank, and then add it to the loan. And like any other bank, your deposit/savings will be used to fund the banks operation/investments.

So there isn't much difference then it's only the description that differs, why I was confused during my research into the subject.

 

[Interested]

'Islamic banking' is a disguise. Just try borrowing from rich relatives or other rich muslims who lend money to help people dodge riba ( i heard there are some good Muslims in US who lend muslim students loans), ayuuto and other alternatives. Bit harder but no riba

Here is sheikh Xasaan talking about it years ago

 

[Abdisamad]

Yes and it’s not a problem that the final value coincides with average interest rates because the final value of the contract doesn’t change. If you agree on $1 million today in 30 years the loan value will still be $1 million

But 1 million dollars of today's money wouldn't have the same value in 30 years, so wouldn't that make them lose money?

 

[Abdisamad]

'Islamic banking' is a disguise. Just try borrowing from rich relatives or other rich muslims who lend money to help people dodge riba ( i heard there are some good Muslims in US who lend muslim students loans)

I'm not in the US sxb.. Also searching for rich people to borrow money from is a bit of a stretch lol..

Here is sheikh Xasaan talking about it years ago

 

[The Oponian Guild]

But if we as Muslims cannot buy a house wouldn't that put us in a disadvantage compared to the rest of the society? So I understand the Islamic bank do have a profit margin for lending the customers money to buy a house or an apartment..

You can make enough money to purchase said property through arms smuggling, laundering, racketeering, fixing, and other forms of illicit activity.

if that’s not possible just save, ask family and extended family to loan you.

 

[The Oponian Guild]

I'm not in the US sxb.. Also searching for rich people to borrow money from is a bit of a stretch lol..

Yeah bro but you gotta knock every door I suppose if you’re really serious about acquiring that property

 

[Abdisamad]

You can make enough money to purchase said property through arms smuggling, laundering, racketeering, fixing, and other forms of illicit activity.

Lool.. Thanks for making me laugh hard sxb..

if that’s not possible just save, ask family and extended family to loan you.

I really hate asking people for money even my family.. But alhamdulillah I'm making enough money to support myself legally, anyway I was just curious to know about the subject, I see most Somalis see buying a house through loan from the bank is strictly forbidden but I see many other Muslim groups such as arabs, turks, Pakistanis etc are all doing it, here where I live one even gets tax benefits if you are a home owner, so basically you can deduct the home loan interest from your income tax etc.. All this puts me and other Somalis in a disadvantage economically, especially if you take our future kids into consideration, many people who own homes generate wealth through home or land ownership then eventually when they grow old the loan has been repaid they'll pass this wealth to their kids.. With this in mind future Somalis will stay poorer compared to other groups of immigrants whom some get permission to buy homes from their scholars i.e Sheiks etc.. Certainly Allah did not create these rules to put us in disadvantage.

 

[Gacmeey]

But 1 million dollars of today's money wouldn't have the same value in 30 years, so wouldn't that make them lose money?

That’s their problem. They can back the value of the loan with a physical commodity that doesn’t change that much in value like gold.

 

[Avalanche]

The best way is to sell all your plots of land and possessions back home. That way you will have enough to buy property in the West.

 

[Angelina]

It’s profit based and the concept is the same as you buying something cheaper and then significantly increasing the price and then telling someone to pay it installments. They will supposedly buy the house for you but mark up the price significantly.

A house worth five hundred thousand will now be worth eight hundred thousand. Three hundred thousand is now the profit that they benefit from.

I don’t know how ethical the mark up is, but since they can’t benefit via interest, they’ll use a huge mark up to do this.

 

[Abdisamad]

The best way is to sell all your plots of land and possessions back home. That way you will have enough to buy property in the West.

I'm not that old bro, don't have any properties back home, but family own some land and homes but that's not on my name, anyway I was just curious to know about house loans because some scholars are saying it is permissible then some are saying it's strictly haram, and when I searched about Islamic banking vs conventional and how they're profiting from home loans I didn't see any big difference as highlighted by @The Oponian Guild in the above comment the Islamic banks also do profit from the loan but instead of calling it an interest they just calculate and include in the loan as I understand.. Anyway I think subject is an important subject to discuss since it's something that affect us all regardless our different diaspora countries in the west... One more thing for those of us who work we also have pension savings which are mandatory for instance my country of residence, the investment scheme handled by a non muslim bank which invest in all kind of difference sectors including bonds which are considered haram as well.. So no matter how we turn and twist it we're in this haram system..

 

[Abdisamad]

It’s profit based and the concept is the same as you buying something cheaper and then significantly increasing the price and then telling someone to pay it installments. They will supposedly buy the house for you but mark up the price significantly.

A house worth five hundred thousand will now be worth eight hundred thousand. Three hundred thousand is now the profit that they benefit from.

I don’t know how ethical the mark up is, but since they can’t benefit via interest, they’ll use a huge mark up to do this.

Thanks for your input walaal.. This also why it didn't make sense why this is considered halal.

 

[Devilsadvocate]

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[Somali Saayid]

But if we as Muslims cannot buy a house wouldn't that put us in a disadvantage compared to the rest of the society?

A house is one of the biggest ways you can leave a sizeable inheritance for your children and build generational wealth and that alone will give them a headstart in life compared to others. On the permissibility of getting a traditional loan if you don't have an Islamic banking institution in your country you will have to check with the scholar.

 

[Gacmeey]

The best way is to sell all your plots of land and possessions back home. That way you will have enough to buy property in the West.

Ma waalatay

The plan is to build enough properties so that the rent from back home pays for the rent in the west.